Firm News and Market Views: The Informational Role of Official Newspapers in China

State control can turn the media into the government’s mouthpiece and weaken the media’s incentives to meet market demands for corporate news. However, the media’s dependence on the government can strengthen its ability to access information about the government’s industrial and macro policies, despite its lack of incentives to gather firm-specific information. We study China’s official party newspapers and commercially oriented, non-official newspapers and find that despite official party newspapers’ heavier state control, they continue to play an informational role by providing a different type of news than non-official newspapers. We show that compared to non-official newspapers, official newspapers provide a greater proportion of value-relevant industry and market-wide information relative to firm-specific information. Additionally, the relative proportion of the components varies depending on the political proximity of the newspaper to the central government, the political situation, and whether the government announces new industrial policies.