What do ads buy? Daily coverage of listed companies on the Italian press

Abstract

We match daily data on newspaper coverage of a sample of Italian listed companies with monthly data on the amount of advertising that a given company has purchased on a given newspaper. Controlling for time-invariant features of each newspaper and of each company -and for ownership links between companies and newspapers -we show that newspaper coverage of a company is positively and significantly related with advertising expenditure by that company on that newspaper. The magnitude of this correlation is quite large: when controlling for ownership links, a standard deviation increase in monthly ads expenditure (i.e. 75,000 euros) is on average associated with 8 additional articles per month mentioning that company. We also find that coverage of a company is higher the day after a press release, but especially in newspapers where more ads are purchased. This result on press releases is robust to controlling for time invariant features of each company-newspaper pair, i.e. for (company × newspaper) fixed effects. Moreover, coverage is correlated with past day absolute return and trading volume, and this relationship appears to be steeper for those newspapers where more ads are purchased, especially in the case of positive returns.

Media slant against foreign owners: Downsizing

“…Similarly, in a subsample of downsizing events in which we identify advertising clients, we find no evidence of advertisers' influence (as in Jonathan Reuter and Eric Zitzewitz, 2006;and in Marco Gambaro and Riccardo Puglisi, 2010). Political economy explanations like Besley and Andrea Prat's (2006) do not apply very well either, as governments had no interest to influence the media against foreign owners given that throughout the entire period we look at, as Germany was run by the globalization-friendly Schröder and Merkel governments.…”

“…Matthew Ellman and Fabrizio Germano (2009), Gambaro and Puglisi (2010) and Reuter and Zitzewitz (2006) As a second analysis, we randomly chose five months (November 2002, July 2005, September 2006, May 2007, May 2008, and record all firms that place advertisements in Die Welt in this period. A total of 42 out of the 290 advertisers we record did shed jobs in Germany in the period of observation.…”

Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls

“…Focusing on four Argentinian newspapers, Di Tella and Franceschelli (2011) document that newspapers in which the government advertises more are less likely to report on corruption scandals involving government officials. Using data on advertising spending by 13 Italian companies on 6 newspapers, Gambaro and Puglisi (2015) find that newspapers on which a given company purchases more ads are more likely to publish articles about that company, especially following that company's press releases. Looking at 52 U.S. newspapers, Beattie (2017) finds that advertising from firms in carbon emitting industries decreases the quantity of coverage of climate change and shifts the tone of coverage towards climate skepticism.…”

Advertising Spending and Media Bias: Evidence from News Coverage of Car Safety Recalls

“…Since the literature (Di Tella and Franceschelli (2011), Puglisi and Gambaro (2015) and Reuter and Ziztewitz (2006)) has focused mainly on short term lags, we next zoom into ad spending in months (t-1), (t-2) and (t-3) to ensure we are not missing any short term effects. As shown in Table 9, introducing the short term lags sequentially (columns (1)-(3)) or all at once (column (4)) has no statistically or economically significant relationship with recall related coverage.…”

“…Focusing on four Argentinian newspapers, Di Tella and Franceschelli (2011) document that newspapers in which the government advertises more are less likely to report on corruption scandals involving government officials. Using data on advertising spending by 13 Italian companies on 6 newspapers, Gambaro and Puglisi (2015) find that newspapers on which a given company purchases more ads are more likely to publish articles about that company, especially following that company's press releases. Looking at 52 U.S. newspapers, Beattie (2017) finds that advertising from firms in carbon emitting industries decreases the quantity of coverage of climate change and shifts the tone of coverage towards climate skepticism.…”