Media Bias against Foreign Firms as a Veiled Trade Barrier TABLE 2. Probit Models Estimating News Coverage Probability of Auto Recalls (1) (2) (3) (4) (5) (6) (7) (8) 0081400006/L0LoL Foreign 0.037* 0.027* 0.027* 0.037* 0.028* 0.026* (0.013) (0.013) (0.013) (0.013) (0.013) (0.013) Official -0.011* -0.029* -0.041* (0.004) (0.006) (0.006) Official Foreign 0.031林 0.030* 0.034* (0.009) (0.009) (0.009) Central Party Official 0.021* -0.034* -0.131* (0.009) (0.012) (0.006) Central Party Official* 0.101* 0.096* 0.140* Foreign (0.021) (0.020) (0.033) Regional Party Official -0.017* 0.028* -0.010 (0.004) (0.006) (0.006 Regional Party Official* 0.019* 0.021* 0.021* Foreign (0.009) (0.009) (0.009) Province FE No No Yes No No No Yes No Newspaper FE No No No Yes No No No Yes Half-year FE No No Yes No No No Yes No Recall FE No No No Yes No No No Yes Observations 35246 35246 35246 32758 35246 35246 35246 32758 Marginal effects;standard errors clustered by recalls in parentheses All models include recall-level controls:the logarithm of recall size and binary indicators of recall types p<0.10,*p<0.05.+p<0.01 interaction term of Official and Foreign,indicating an theses.16 The results suggest that foreign recalls gener- additional degree of bias exhibited by official newspa- ally receive more media coverage,and official newspa- pers.If the media's home bias simply reflects economic pers drive this tendency.Foreign appears to be positive nationalism of readers,we should observe the bias pri- and significant at the 0.01 level in the first model,yet 是 marily in nonofficial newspapers(positive and statis- its significance becomes weaker when its interaction tically significant B1),but there is no reason to expect term with the Official variable is added in models 2-4. official newspapers to exhibit an additional degree of The interaction term is always positive and statistically bias,meaning that B3 should not appear to be positive significant at the 0.01 level.This suggests that official and statistically significant.In contrast,if the media's newspapers are more likely to report foreign recalls home bias primarily reflects the government's inter- than domestic recalls,while such a tendency is far less est in protecting domestic industry,we should observe pronounced in nonofficial papers. the bias more from official newspapers,meaning that To further investigate the mechanism by which home B3 should be positive and statistically significant.This bias occurs,I estimate additional models presented in would imply that official newspapers tend to selectively columns 5-8,where I include separate indicators for report recalls of imported cars to a greater extent than Central Party Official and Regional Party Official and commercial newspapers. their interaction terms with Foreign.Official newspa- The specification controls for Recall Size (Logged), pers have different sponsoring institutions,from the the logged number of affected cars in each recall inci- central party to various province or municipal-level dent,since a recall involving more cars would attract parties.As the central party is the main decision-maker more media attention,and seven binary indicators of dealing with trade liberalization,it would be under recall types (e.g.,engine,brake,or electrical system), more pressure from interest groups seeking protection. because some types may receive more coverage than Also,the Chinese automobile industry is dominated by others.Across the models,I either include province- state-owned companies,majority of which are owned specific or newspaper-specific fixed effects.I also in- by the central party7 According to the government- clude either half-year-specific or recall-specific fixed ef- driven bias hypothesis,then,central-party-controlled fects.Standard error is clustered by recall to account for the dependence between different newspapers'obser- 16 To economize the space,I present the estimation results only for vations of the same recall event.As a robustness test. key variables of interest throughout the paper.The full results,in- I employ a two-way clustering by province and recall cluding for the control variables,are presented in Appendix Section (see Appendix Table A15). mone the 47 passenger car companies listed in the 2009Ch /:sony Table 2 presents the estimation results with marginal Large Corporation Yearbook,22 are owned by the State-owned As- effects in the main entries and standard errors in paren- sets Supervision and Administration Commission(SASAC)of the State Council,or their joint venture with foreign companies,16 are 961Media Bias against Foreign Firms as a Veiled Trade Barrier TABLE 2. Probit Models Estimating News Coverage Probability of Auto Recalls (1) (2) (3) (4) (5) (6) (7) (8) Foreign 0.037∗∗ 0.027∗ 0.027∗ 0.037∗∗ 0.028∗ 0.026∗ (0.013) (0.013) (0.013) (0.013) (0.013) (0.013) Official − 0.011∗∗ − 0.029∗∗ − 0.041∗∗ (0.004) (0.006) (0.006) Official ∗ Foreign 0.031∗∗ 0.030∗∗ 0.034∗∗ (0.009) (0.009) (0.009) Central Party Official 0.021∗ − 0.034∗∗ − 0.131∗∗ (0.009) (0.012) (0.006) Central Party Official ∗ 0.101∗∗ 0.096∗∗ 0.140∗∗ Foreign (0.021) (0.020) (0.033) Regional Party Official − 0.017∗∗ − 0.028∗∗ − 0.010 (0.004) (0.006) (0.006) Regional Party Official ∗ 0.019∗ 0.021∗ 0.021∗ Foreign (0.009) (0.009) (0.009) Province FE No No Yes No No No Yes No Newspaper FE No No No Yes No No No Yes Half-year FE No No Yes No No No Yes No Recall FE No No No Yes No No No Yes Observations 35246 35246 35246 32758 35246 35246 35246 32758 Marginal effects; standard errors clustered by recalls in parentheses. All models include recall-level controls: the logarithm of recall size and binary indicators of recall types. + p < 0.10, ∗ p < 0.05, ∗∗ p < 0.01 interaction term of Official and Foreign, indicating an additional degree of bias exhibited by official newspa￾pers. If the media’s home bias simply reflects economic nationalism of readers, we should observe the bias pri￾marily in nonofficial newspapers (positive and statis￾tically significant β1), but there is no reason to expect official newspapers to exhibit an additional degree of bias, meaning that β3 should not appear to be positive and statistically significant. In contrast, if the media’s home bias primarily reflects the government’s inter￾est in protecting domestic industry, we should observe the bias more from official newspapers, meaning that β3 should be positive and statistically significant. This would imply that official newspapers tend to selectively report recalls of imported cars to a greater extent than commercial newspapers. The specification controls for Recall Size (Logged), the logged number of affected cars in each recall inci￾dent, since a recall involving more cars would attract more media attention, and seven binary indicators of recall types (e.g., engine, brake, or electrical system), because some types may receive more coverage than others. Across the models, I either include province￾specific or newspaper-specific fixed effects. I also in￾clude either half-year-specific or recall-specific fixed ef￾fects. Standard error is clustered by recall to account for the dependence between different newspapers’ obser￾vations of the same recall event. As a robustness test, I employ a two-way clustering by province and recall (see Appendix Table A15). Table 2 presents the estimation results with marginal effects in the main entries and standard errors in paren￾theses.16 The results suggest that foreign recalls gener￾ally receive more media coverage, and official newspa￾pers drive this tendency. Foreign appears to be positive and significant at the 0.01 level in the first model, yet its significance becomes weaker when its interaction term with the Official variable is added in models 2–4. The interaction term is always positive and statistically significant at the 0.01 level. This suggests that official newspapers are more likely to report foreign recalls than domestic recalls, while such a tendency is far less pronounced in nonofficial papers. To further investigate the mechanism by which home bias occurs, I estimate additional models presented in columns 5–8, where I include separate indicators for Central Party Official and Regional Party Official and their interaction terms with Foreign. Official newspa￾pers have different sponsoring institutions, from the central party to various province or municipal-level parties. As the central party is the main decision-maker dealing with trade liberalization, it would be under more pressure from interest groups seeking protection. Also, the Chinese automobile industry is dominated by state-owned companies, majority of which are owned by the central party.17 According to the government￾driven bias hypothesis, then, central-party-controlled 16 To economize the space, I present the estimation results only for key variables of interest throughout the paper. The full results, in￾cluding for the control variables, are presented in Appendix Section A2. 17 Among the 47 passenger car companies listed in the 2009 China Large Corporation Yearbook, 22 are owned by the State-owned As￾sets Supervision and Administration Commission (SASAC) of the State Council, or their joint venture with foreign companies, 16 are 961 Downloaded from https://www.cambridge.org/core. Shanghai JiaoTong University, on 26 Oct 2018 at 03:53:05, subject to the Cambridge Core terms of use, available at https://www.cambridge.org/core/terms. https://doi.org/10.1017/S0003055418000242