Political relations and media coverage
研究美国与外国政治关系恶化如何导致美国媒体对该公司负面报道增多，并探讨其经济机制和后果，对投资者和跨国企业有参考价值。
We study the impact of political relations on media coverage. Using a sample of 3,290 American Depository Receipts (ADRs) from 45 countries, we find that deteriorating political relations between the US and an ADR firm's home country induce negative coverage by the US media of the ADR firm. To alleviate endogeneity, we adopt France's and Germany's opposition to the Iraq War and the inauguration of the US president as two shocks to bilateral political relations between the US and foreign countries. In placebo tests, we show no negative effect of political relations on ADR firms’ press releases or non-US media coverage. We further document the three economic mechanisms underlying the impact of political relations on media coverage: US journalists’ country sentiment, a country's popularity among US readers, and the US media's political beliefs. Finally, we document two consequences of negative coverage by the US media: investors respond less to negative news of firms from countries with deteriorating political relations with the US, and negative coverage leads to a greater likelihood of firms terminating their ADRs.