Sung Eun Kim FIGURE 1.Predicted Probability of Reporting a Recall Event by Newspaper Type Central Party Official Regional Party Official Non-Official 0 9 4. 681012 14 2 468101214 468101214 Log (Recall Size) Log(Recall Size) Log (Recall Size) -Foreign Recalls --Domestic Recalls newspapers would exhibit more bias against foreign for central party officials,followed by regional party 4号 automakers than regional official newspapers. officials.For example,consider a recall involving 1,100 The estimation results in columns 5-8 are consistent cars (In(1,100)7).While a central-party-sponsored with this hypothesis:central-party-controlled newspa- newspaper has a 12.5%probability of reporting & pers are more likely to cover foreign recalls than do- the recall by a domestic automaker,this probability mestic ones.The estimated coefficient for the variable almost doubles to 23.9%for a foreign automaker Central Party Official Foreign is always statistically A regional official newspaper has,on average,a significant at the 0.01 level and substantively meaning- 13.0%probability of reporting a domestic recall and ful in the expected direction.The estimated coefficient a 171%probability of reporting a foreign recall.The for the variable Regional Party Officials Foreign is substantive effect of an automaker being foreign is positive and statistically significant,but its magnitude marginal in a commercial newspaper that has,on is much smaller.18 average,a 15.4%of probability of covering a domestic I assess the substantive effects of an automaker be- recall and a 20.0%probability of covering a foreign ing foreign across three types of newspapers.Figure 1 one,holding all other characteristics constant.20 describes the predicted probability that each type of Next,I employ two additional measures of media newspaper covers a recall event depending on the bias,intensity and tone of reporting.Newspapers with recall size and the domestic/foreign classification.19 a home bias would provide more intensive coverage of Holding the size of a recall and other factors constant, recalls involving foreign cars and may report them in all three types are more likely to report foreign recalls, a more negative light.For instance,Guangzhou Daily but the substantive effect appears to be the largest published a lengthy news report on BMW's recall an- nouncement in August 2010,questioning whether the owned by the SASAC of the provincial/municipal level parties or delay in the announcement is due to their unfair treat- their joint venture with foreign companies.The rest are privately ment of Chinese consumers.This contrasts with Bei- owned.I collected ownership information from companies'annual jing Daily's brief coverage of the domestic car com- reports available at the Shanghai Stock Exchange (http://www.sse pany Dongfeng's recall decision in May 2009.This re- com.cn),the Shenzhen Stock Exchange (http://www.szse.cn/main/) port simply covered factual information on the affected and companies'own websites. 18 The interaction term captures the relative strength of bias exhib models and recall procedures (see Appendix Section ited by central or regional official media relative to nonofficial ones A1.3 for the full texts). I conduct an additional set of analyses by splitting the sample into central party officials,regional party officials,and commercial news- papers.This allows a coefficient for Foreign to vary for different sam 20 I find a similar substantive effect when I analyze a proportion of ples,providing an estimate of absolute degree of home bias exhibited foreign recall-related news reports to all recall reports,based on an by each type of newspapers.The results presented in Appendix Table A8 are similar to the results from the main models,showing that the beproporti o pr magnitude of Foreign appears to be the most substantial for central cials,and by0.05 for regional party officials,compared to commercial party official newspapers,followed by regional party official news- newspapers.The estimate for regional party officials is smaller than papers.The effect of Foreign is smallest for commercial newspapers. for central party officials and not statistically significant.This is in This suggests that the degree of home bias exhibited by commercial part due to the variation in the degree of bias across regions.While The probability is calculated with 1000 simulations based on all central party officials have strong protectionist incentives and ex hibit the strongest bias,there is a substantial variation in regional Model 6,with engine as the recall type. governmental interests,as further examined in the next section. 962Sung Eun Kim FIGURE 1. Predicted Probability of Reporting a Recall Event by Newspaper Type 0 .1 .2 .3 .4 .5 .6 Predicted Probability of News Coverage 0 2 4 6 8 10 12 14 Log (Recall Size) Central Party Official 0 .1 .2 .3 .4 .5 .6 Predicted Probability of News Coverage 0 2 4 6 8 10 12 14 Log (Recall Size) Regional Party Official 0 .1 .2 .3 .4 .5 .6 Predicted Probability of News Coverage 0 2 4 6 8 10 12 14 Log (Recall Size) Non-Official Foreign Recalls Domestic Recalls newspapers would exhibit more bias against foreign automakers than regional official newspapers. The estimation results in columns 5–8 are consistent with this hypothesis: central-party-controlled newspa￾pers are more likely to cover foreign recalls than do￾mestic ones. The estimated coefficient for the variable Central Party Official ∗ Foreign is always statistically significant at the 0.01 level and substantively meaning￾ful in the expected direction. The estimated coefficient for the variable Regional Party Officials ∗ Foreign is positive and statistically significant, but its magnitude is much smaller.18 I assess the substantive effects of an automaker be￾ing foreign across three types of newspapers. Figure 1 describes the predicted probability that each type of newspaper covers a recall event depending on the recall size and the domestic/foreign classification.19 Holding the size of a recall and other factors constant, all three types are more likely to report foreign recalls, but the substantive effect appears to be the largest owned by the SASAC of the provincial/municipal level parties or their joint venture with foreign companies. The rest are privately owned. I collected ownership information from companies’ annual reports available at the Shanghai Stock Exchange (http://www.sse. com.cn), the Shenzhen Stock Exchange (http://www.szse.cn/main/), and companies’ own websites. 18 The interaction term captures the relative strength of bias exhib￾ited by central or regional official media relative to nonofficial ones. I conduct an additional set of analyses by splitting the sample into central party officials, regional party officials, and commercial news￾papers. This allows a coefficient for Foreign to vary for different sam￾ples, providing an estimate of absolute degree of home bias exhibited by each type of newspapers.The results presented in Appendix Table A8 are similar to the results from the main models, showing that the magnitude of Foreign appears to be the most substantial for central party official newspapers, followed by regional party official news￾papers. The effect of Foreign is smallest for commercial newspapers. This suggests that the degree of home bias exhibited by commercial newspapers is marginal. 19 The probability is calculated with 1,000 simulations based on Model 6, with engine as the recall type. for central party officials, followed by regional party officials. For example, consider a recall involving 1,100 cars (ln(1, 100) ≈ 7). While a central-party-sponsored newspaper has a 12.5% probability of reporting the recall by a domestic automaker, this probability almost doubles to 23.9% for a foreign automaker. A regional official newspaper has, on average, a 13.0% probability of reporting a domestic recall and a 17.1% probability of reporting a foreign recall. The substantive effect of an automaker being foreign is marginal in a commercial newspaper that has, on average, a 15.4% of probability of covering a domestic recall and a 20.0% probability of covering a foreign one, holding all other characteristics constant.20 Next, I employ two additional measures of media bias, intensity and tone of reporting. Newspapers with a home bias would provide more intensive coverage of recalls involving foreign cars and may report them in a more negative light. For instance, Guangzhou Daily published a lengthy news report on BMW’s recall an￾nouncement in August 2010, questioning whether the delay in the announcement is due to their unfair treat￾ment of Chinese consumers. This contrasts with Bei￾jing Daily’s brief coverage of the domestic car com￾pany Dongfeng’s recall decision in May 2009. This re￾port simply covered factual information on the affected models and recall procedures (see Appendix Section A1.3 for the full texts). 20 I find a similar substantive effect when I analyze a proportion of foreign recall-related news reports to all recall reports, based on an aggregate measure for each newspaper. As presented in Appendix Table A9, this proportion is higher by 0.13 for central party offi￾cials, and by 0.05 for regional party officials, compared to commercial newspapers. The estimate for regional party officials is smaller than for central party officials and not statistically significant. This is in part due to the variation in the degree of bias across regions. While all central party officials have strong protectionist incentives and ex￾hibit the strongest bias, there is a substantial variation in regional governmental interests, as further examined in the next section. 962 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