The Spillover Effect of Media Ownership on Mainstream Media Discourse

ABSTRACT This article investigates the spillover effect of a firm's media ownership on reporting by unaffiliated mainstream media outlets, using a sample of Chinese publicly listed firms. We find that firms with ownership stakes in media companies receive more coverage and more positive tones from unaffiliated mainstream media outlets than other firms do. We also find evidence suggesting mechanisms for this effect: media ownership facilitates firms in building connections with unaffiliated media outlets. In addition, we find that this spillover effect of media ownership on unaffiliated media outlets is more prominent when market‐investor sentiment is more pessimistic, when firms are in “sin” industries, and when firms encounter corporate scandals. Furthermore, we document that media ownership enhances the dissemination of information disclosure and increases firm value.