Freedom of the press and corporate misconduct

Abstract

This study examines how freedom of the press affects corporate misconduct, focusing mainly on earnings management. I find that firms engage more in earnings management when they have a high percentage of sales in countries with restricted media freedom. I find that the influence of foreign partners’ media freedom on earnings management depends on how domestic investors process information about firm export markets and how multinational firms shape their relationship with stakeholders. Additionally, the presence of analysts in foreign countries reduces firms’ incentives to exploit media restriction to manipulate earnings. Finally, I further show that insiders of these firms tend to be involved in opportunistic insider trading, which could indicate corporate misconduct. Overall, these results show that corporate misconduct can be in part explained by a spill‐over effect of the media freedom of export markets.

Religiosity and corruption in bank lending

“…The positive coefficient of Inflation and negative coefficient of GDP growth are in line with the arguments in the literature that corruption in bank lending is less of an obstacle to firms in countries that have a more stable monetary environment and a higher overall growth rate (Barry et al, 2016; Boyd et al., 2001). Higher state ownership in the media and restricted freedom of the press lead to more bank corruption, which is consistent with the idea that the media can act as an important monitor to constrain corporate misconduct (Houston et al., 2011; Nguyen, 2021). Corruption in bank lending is less of an obstacle to firm growth in countries where the supervisory strategy focuses on empowering the private monitoring of banks, supporting the private empowerment view (Beck et al., 2006).…”

“…A higher value for this variable indicates better external audit quality. Given the potential role of media monitoring on corporate outcomes (Houston et al, 2011;Nguyen, 2021), we include the variable State Ownership in Press, which represents the percentage of state-owned newspapers out of the five largest daily newspapers (by circulation) and Press freedom, which measures the degree of media freedom in each country in 1999. Then, following Beck et al (2006), we include two indicators of supervisory practices in a country.…”

Media Electronic as an Alternative Method to Improve Learning Process

“…For instance, the intricacy of using new technology and the effect of media restrictions on insider acquisitions might provide problems for electronic media processes. DeSanctis & Poole, 1994;Nguyen, 2021). Furthermore, parental control over their children's internet usage and the methods they use to supervise their young children's media consumption draw attention to certain drawbacks and issues with electronic media processes (Livingstone & Helsper, 2008;Nikken & Schols, 2015).…”

Examining the influence of corporate social responsibility performance on earnings management: A global perspective in the context of sustainable development

“…Furthermore, Miller (2006) indicates that the media also serves as a monitor or watchdog to prevent accounting fraud. It is because information in a climate with great media freedom can flow more freely to the public, thereby preventing corporate misconduct, such as earnings management (T. Nguyen, 2021), enhancing firms' information environment (Berger et al, 2017), reducing the probability of tax planning practices (Kanagaretnam et al, 2018). In this vein, Y. Chen, Cheng, et al (2021) argue that managers' opportunistic activities are curtailed by the media, which acts as an external monitor.…”

“…Theoretically, when firms are extensively exposed to nations with limited media freedom, their involvement in earnings management can be attributed to two primary reasons. First, multinational firms, unlike their purely domestic counterparts, must account for the interests and expectations of a broader and more diverse range of stakeholders, including capital providers, competitors, customers, employees, communities, and governments (Detomasi, 2007; T. Nguyen, 2021). As a result, multinational corporations may adjust their operational strategies, such as augmenting investments in CSR, to meet the demands of stakeholders (Abugre & Anlesinya, 2020; Attig et al, 2016; Brammer et al, 2006).…”