Working Paper: CEPR ID: DP9014
Authors: Vincent Bignon; Marc Flandreau
Abstract: This paper develops a new insight enabling the empirical study of media capture: minority shareholders of newspapers and readers face similar risks. Both are adversely affected when corrupt insiders use the newspaper for personal profit and receive invisible revenues. This means that relevant data on influence and exploitation of newspaper has been hiding in plain sight in stock exchange or over-the-counter prices, since stock transactions reflect the value of this capture. Empirical data is consistent with increasing levels of looting in France during the 1930s. We provide a comparison with Britain and argue that Britain managed to protect its newspapers better.
Keywords: Control Premium; Corruption; France; Governance; Interwar; Media; Minority Shareholders
JEL Codes: D72; G34; L82; N24; N74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| media capture (L96) | decline in the quality of news (L15) |
| decline in the quality of news (L15) | reduced reader demand (Y50) |
| reduced reader demand (Y50) | decreased profitability for newspapers (G32) |
| media capture (L96) | exploitation of newspapers by insiders (G14) |
| exploitation of newspapers by insiders (G14) | lower quality journalism (L15) |
| control rights of newspaper owners (P14) | economic consequences for minority shareholders and readers (G34) |
| increase in voting premiums over time (D72) | escalation of corrupt practices within the French press (D73) |