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Word Power: The Impact of Negative Media Coverage on Disciplining Corporate Pollution

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Abstract

Sequences of individual words make up media reports. And sequences of media reports constitute the power of the news media to influence corporate practices. In this paper, we focus on the micro-foundations of news reports to elaborate how an atmosphere of negative news reports following an initial exposure of corporate pollution activity can help stop such activity through their impact on corporate managers. We extend our understanding of the corporate governance effect of news media by considering two new aspects of reports—one, the proportion of words in negative reports relative to the total number of words in all reports; and two, the geographical origin of news media. We suggest that the more negative the media coverage, and the more local this coverage, the greater the impact on corporations. Our study of news media reports from more than 600 newspaper sources on disciplining pollution activities of listed Chinese firms from 2004 to 2012 provides strong support for our hypotheses. These findings have valuable implications for the handling of pollution issues in transitional economies via the power of news words.

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Notes

  1. The source of information is http://www.envir.gov.cn/law/envir.htm.

  2. Numerous keywords are used in Chinese to portray the characteristics of corporate pollution events including: contaminate, damage, pollution discharge, underlying discharge, waste water, out of limitation, leak, explode, death, accident, safe, violation, smoke dust, oil leak, dam break, loss, gas, carcinogenic, poison, blacklist, deforestation, investigation, waste gas, waste residue, dirty, reorganize, revamp (in Chinese, these terms are 污染、破坏、排污、偷排、废水、超标、泄露、爆炸、死亡、事故、安全、违规、烟尘、溢油、漏油、溃坝、损失、瓦斯、致癌、毒、黑名单、毁林、违法、调查、废气、废渣、黑榜、恶、脏、整顿、整改).

  3. The Institution of Public and Environmental Affairs (IPE) is a registered non-profit organization based in Beijing. Since its establishment in May 2006, the IPE has developed two pollution databases (water and air) to monitor corporate environmental performance and to facilitate public participation in environmental governance.

  4. Until the end of our time period.

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Acknowledgments

The authors express their appreciation to editor professor Thomas Clarke and three anonymous reviewers for their suggestions and comments. However, the authors are responsible for all errors in the paper. This study was funded by grants from the National Natural Science Foundation of China (No. 71372065; No. 71272002), the Supported by Program for New Century Excellent Talents in University (No. NCET-11-0816; No. NCET-12-0439), and Technology Foundation for Selected Overseas Chinese Scholar (No. 18920004). We also thank the Program for Star of Shaanxi Youth Science and Technology (No. 2013KJXX-52) and the Social Science Promotion Program in Northwestern Polytechnical University (No. G2015KY0205).

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Authors and Affiliations

  1. Management School of Northwestern Polytechnical University, Xi’an, 710072, Shaanxi, China

    Ming Jia & Li Tong

  2. Lubin School of Business, Pace University, 1 Pace Plaza, New York, NY, 10038, USA

    P. V. Viswanath

  3. Management School of Xi’an Jiao Tong University, Xi’an, 710049, Shaanxi, China

    Zhe Zhang

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  1. Ming Jia
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Jia, M., Tong, L., Viswanath, P.V. et al. Word Power: The Impact of Negative Media Coverage on Disciplining Corporate Pollution. J Bus Ethics 138, 437–458 (2016). https://doi.org/10.1007/s10551-015-2596-2

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