The media forces companies to behave more in the interests of shareholders, according to research by an American professor of entrepreneurship. This is perhaps no surprise following a number of cases of “greedy fat-cats” being eased out, but there is a sting in the tale for the British media.
Luigi Zingales of Chicago Graduate School of Business conducted his research in Russia because the high level of corporate abuse gave him plenty to work with. He was looking at British and American media as well as Russian publications. This is what he says:
Between the two most credible foreign newspapers, coverage of corporate governance abuses in The Wall Street Journal typically has more impact than coverage in the Financial Times. This could be due to either higher credibility of the former or different audiences. To separate the effect of audience from that of credibility, the authors use the Russianlanguage publication Vedomosti for comparison. Since Vedomosti is a joint venture of The Wall Street Journal and the Financial Times, its credibility is likely to be similar to the two larger papers. However, as a Russian-language paper, it only reaches a Russian audience. The authors found that coverage in Vedomosti had no significant effect, suggesting that all leverage on reputation comes from exposure in the Anglo- American community.
You can hear the cries of “Ouch!”