WHY MEDIA SLANT? Media coverage of mergers and acquisitions in China

Figures & data

Table 1. Variable definitions.

Variables	Definition
Media Attention	Number of news articles with bidder and target companies reported by Chinese newspapers from the announcement date to a minimum of +60 days (date withdrawn). News articles are obtained from the China Core Newspaper Full-text Database.
Positive Tone	The proportion of positive words to total word count for each deal analyzed by ROST EA text analysis software.
Positive Stock	Product of Media Attention and Positive Tone.
State Media Attention	Number of deal-specific news articles reported by the China Securities Journal, Securities Daily, Securities Times, and the Shanghai Securities Journal.
State Positive Tone	Proportion of positive words to total words in state-controlled articles analyzed by ROST EA.
State Positive Stock	Product of State Media Attention and State Positive Tone.
Market Media Attention	Number of deal-specific news articles reported by the China Business Journal, First Financial Daily, The Economic Observer, and the 21st Century Business Herald.
Market Positive Tone	Proportion of positive words to total words in market-controlled articles analyzed by ROST EA.
Market Positive Stock	Product of Market Media Attention and Market Positive Tone.
Prior Experience Dummy	A dummy variable that equals 1 if an acquirer has M&A experience before a deal, and 0 otherwise. We manually identify the experience data from the Zephyr database.
Gap Days	Difference between a prior M&A deal and objective M&A deal.
Overseas Experience Dummy	A dummy variable that equals 1 if an acquirer’s prior M&A deal was an overseas transaction, and 0 otherwise.
Prior Deal Size	Natural logarithms of the deal value of a prior M&A deal.
Deal Size	Natural logarithms of the deal value of a transaction.
Completed Dummy	A dummy variable that equals 1 if a transaction is successfully completed, and 0 if the transaction is withdrawn.
Overseas Deal Dummy	A dummy variable that equals 1 if a target firm is a foreign firm, and 0 otherwise.
Diversifying Dummy	A dummy variable that equals 1 if the target and bidder firms are not in the same industry, and 0 otherwise.
SOE	A dummy variable that equals 1 for SOE acquirer status at the end of the fiscal year prior to an acquisition announcement, and 0 otherwise. Ownership data are obtained from the Sinofin Economic and Financial Database.
ROA	Net return on total assets at the end of the fiscal year prior to an acquisition announcement. Financial data are obtained from the CSMAR database.
Board Independence	Ratio of independent board members to total board members at the end of the fiscal year prior to an acquisition announcement.
Management Ownership	Proportion of bidder firm owned by managers and board members at the end of the fiscal year prior to an acquisition announcement.
Leverage	Book value of debt over book value of total assets at the end of the fiscal year prior to an acquisition announcement.
Administrative Expense/Sales	Ratio of administrative expense to sales revenue at the end of the fiscal year prior to an acquisition announcement.
Sales/Assets	Ratio of sales revenue to total assets at the end of the fiscal year prior to an acquisition announcement.
Liquidity	Ratio of current assets to current liabilities at the end of the fiscal year prior to an acquisition announcement.
Sales Expense Growth	Growth rate of selling expense at the end of the fiscal year prior to an acquisition announcement.

Source: Authors formation.

Figure 1. Sample of evolution of M&A transactions during 2008–2018.

Source: Authors formation.

Table 2. Summary statistics.

Variables	N	Mean	Std. Dev.	Min	Max
Media Attention	1321	1.739	4.026	0.000	67.000
Positive Tone	678	0.440	0.156	0.000	0.870
Positive Stock	678	1.535	2.336	0.000	33.172
State Media Attention	1321	0.939	1.804	0.000	20.000
State Positive Tone	552	0.426	0.154	0.000	0.828
State Positive Stock	552	0.972	0.979	0.000	7.608
Market Media Attention	1321	0.214	0.705	0.000	13.000
Market Positive Tone	194	0.378	0.145	0.000	0.800
Market Positive Stock	194	0.554	0.515	0.000	5.287
Prior Experience Dummy	1321	0.463	0.499	0.000	1.000
Gap Days	612	1086.838	953.287	1.000	5726.000
Overseas Experience Dummy	612	0.070	0.256	0.000	1.000
Prior Deal Size	612	6.009	1.170	4.605	11.584
Deal Size	1321	6.162	1.179	4.605	11.584
Completed Dummy	1321	0.918	0.274	0.000	1.000
Overseas Deal Dummy	1321	0.045	0.207	0.000	1.000
Diversifying Dummy	1321	0.108	0.311	0.000	1.000
SOE	1321	0.438	0.496	0.000	1.000
ROA	1321	0.046	0.057	–0.362	0.863
Board Independence	1321	0.369	0.052	0.091	0.667
Management Ownership	1321	0.126	0.197	0.000	0.822
Leverage	1321	0.443	0.240	0.021	5.080
Administrative Expense/Sales	1321	0.103	0.083	0.002	1.068
Sales/Assets	1321	0.671	0.530	0.062	4.928
Liquidity	1321	2.362	3.480	0.103	50.462
Sales Expense Growth	1321	3.531	76.985	–1.000	1975.772

Source: Authors formation.

Table 3. Univariate test of differences between SOE and non-SOE acquirers.

Variables	Non-SOE acquirers		SOE acquirers		Homogeneity across means
	N	Mean	N	Mean
Positive Stock	369	1.431	309	1.659	–0.227
State Positive Stock	296	0.980	256	0.963	0.017
Market Positive Stock	108	0.556	86	0.551	0.006
Prior Experience Dummy	743	0.380	578	0.571	–0.191***
Gap Days	282	865.106	330	1276.318	–411.212***
Overseas Experience Dummy	282	0.067	330	0.073	–0.005
Deal Size	743	6.053	578	6.303	–0.250***
Completed Dummy	743	0.890	578	0.955	–0.065***
Overseas Deal Dummy	743	0.047	578	0.042	0.006
Diversifying Dummy	743	0.094	578	0.126	–0.032*
ROA	743	0.056	578	0.034	0.021***
Board Independence	743	0.372	578	0.365	0.008***
Management Ownership	743	0.219	578	0.007	0.212***
Leverage	743	0.373	578	0.532	–0.160***
Administrative Expense/Sales	743	0.120	578	0.082	0.037***
Sales/Assets	743	0.600	578	0.761	–0.161***
Liquidity	743	2.959	578	1.595	1.365***
Sales Expense Growth	743	6.094	578	0.237	5.856

Source: Authors formation.

Table 4. Regression of overseas M&A experience on positive coverage.

Independent variables	Total sample		Non-SOE acquirers	SOE acquirers
	(1)	(2)	(3)	(4)
Overseas Experience Dummy		1.155** (2.05)	2.401** (2.62)	0.034 (0.05)
SOE	–0.011 (–0.05)	–0.176 (–0.40)
Deal Size	0.623*** (8.32)	0.630*** (4.89)	0.932*** (3.76)	0.561*** (3.66)
Completed Dummy	–0.382 (–1.27)	–0.886 (–1.65)	–0.596 (–0.93)	–2.169** (–2.13)
Overseas Deal Dummy	0.920** (2.16)	2.224*** (2.73)	9.745*** (5.67)	–0.291 (–0.27)
Diversifying Dummy	–0.449 (–1.12)	–0.019 (–0.03)	–1.138 (–0.87)	–0.447 (–0.44)
ROA	4.029*** (2.71)	9.110** (2.37)	10.040 (1.33)	8.460* (1.75)
Board Independence	3.160** (1.99)	4.571* (1.67)	3.626 (0.83)	6.675* (1.89)
Management Ownership	–0.938* (–1.65)	–1.066 (–0.83)	–2.010 (–1.37)	1.553 (0.31)
Leverage	0.267 (0.71)	2.265* (1.81)	2.397 (1.10)	1.705 (1.03)
Administrative Expense/Sales	–1.323 (–1.06)	0.296 (0.11)	2.329 (0.68)	–4.233 (–0.81)
Sales/Assets	–0.036 (–0.18)	–0.416 (–1.24)	–1.020* (–1.69)	–0.030 (–0.07)
Liquidity	0.025 (0.99)	–0.007 (–0.07)	–0.052 (–0.44)	0.104 (0.37)
Sales Expense Growth	0.002** (2.01)	0.003** (2.53)	0.008*** (5.54)	–0.202 (–0.63)
Year and industry fixed effects	Yes	Yes	Yes	Yes
Constant	–2.135 (–0.90)	–8.685*** (–2.69)	–10.220** (–2.52)	–3.816 (–1.03)
Observations	678	303	129	174
Pseudo-R square	0.226	0.384	0.687	0.366

Note: Regression results of determinants of media positive coverage of Chinese M&A announcements during 2008–2018. Robust standard errors are reported in parentheses; ∗∗∗, ∗∗, and ∗ denote significance at 1%, 5%, and 10% levels respectively.

Source: Authors formation.

Table 5. Regression of overseas M&A experience on media attention.

Independent variables	Total sample		Non-SOE acquirers	SOE acquirers
	(1)	(2)	(3)	(4)
Overseas Experience Dummy		1.729** (2.56)	3.736*** (3.62)	0.144 (0.16)
SOE	0.126 (0.47)	0.156 (0.33)
Deal Size	1.234*** (13.45)	1.158*** (7.86)	0.961*** (3.83)	1.211*** (6.44)
Completed Dummy	–1.211*** (–3.07)	–1.676** (–2.42)	–1.634** (–2.00)	–3.677** (–2.44)
Overseas Deal Dummy	0.279 (0.55)	0.917 (1.06)	3.845*** (2.87)	–1.717 (–1.40)
Diversifying Dummy	–0.687* (–1.88)	–0.637 (–0.97)	–0.333 (–0.30)	–1.079 (–1.23)
ROA	6.490*** (3.24)	11.130*** (2.70)	10.400 (1.55)	7.352 (1.29)
Board Independence	5.312*** (2.67)	4.923 (1.47)	1.783 (0.34)	10.370** (2.18)
Management Ownership	–0.892 (–1.34)	–1.864 (–1.40)	–2.368 (–1.57)	6.041 (0.83)
Leverage	0.698 (1.32)	2.476* (1.82)	4.879** (2.02)	–0.476 (–0.25)
Administrative Expense/Sales	0.672 (0.42)	3.766 (1.19)	5.838 (1.45)	–4.123 (–0.71)
Sales/Assets	0.040 (0.17)	–0.002 (–0.00)	–0.511 (–0.62)	0.354 (0.68)
Liquidity	0.009 (0.26)	0.031 (0.24)	0.016 (0.10)	–0.298 (–0.82)
Sales Expense Growth	0.002 (1.62)	0.003* (1.90)	0.006*** (3.06)	–0.241 (–0.78)
Year and industry fixed effects	Yes	Yes	Yes	Yes
Constant	–7.720*** (–2.74)	3.186 (0.63)	–13.480** (–2.53)	–9.742* (–1.92)
Observations	1321	612	282	330
Pseudo-R square	0.230	0.301	0.447	0.290

Note: Regression models of the determinants of media attention of Chinese M&A announcements during 2008–2018. Robust standard errors are reported in parentheses; ∗∗∗, ∗∗, and ∗ denote significance at the 1%, 5%, and 10% levels, respectively.

Source: Authors formation.

Table 6. Interaction effect of deal size and overseas experience on positive coverage.

Independent variables	Total sample			Non-SOE acquirers	SOE acquirers
	(1)	(2)	(3)	(4)	(5)
Prior Deal Size	–0.142 (–1.03)	–0.123 (–0.90)	–0.253* (–1.79)	–0.028 (–0.12)	–0.360* (–1.98)
Overseas Experience Dummy		1.121** (1.99)	–7.843*** (–2.67)	–13.220** (–2.12)	–2.027 (–0.54)
Overseas Experience Dummy× Prior Deal Size			1.505*** (3.10)	2.639** (2.53)	0.319 (0.53)
SOE	–0.158 (–0.36)	–0.150 (–0.34)	–0.136 (–0.32)
Deal Size	0.670*** (4.98)	0.662*** (4.95)	0.672*** (5.11)	0.738*** (2.89)	0.659*** (4.11)
Completed Dummy	–0.884 (–1.63)	–0.890* (–1.65)	–0.923* (–1.75)	–0.650 (–1.04)	–2.187** (–2.16)
Overseas Deal Dummy	2.331*** (2.85)	2.236*** (2.75)	2.295*** (2.87)	7.958*** (4.40)	–0.121 (–0.11)
Diversifying Dummy	0.005 (0.01)	–0.038 (–0.05)	–0.033 (–0.04)	–0.770 (–0.60)	–0.376 (–0.38)
ROA	10.210*** (2.66)	9.270** (2.41)	7.481* (1.95)	8.733 (1.18)	8.876* (1.82)
Board Independence	5.396* (1.96)	4.766* (1.73)	4.721* (1.75)	3.218 (0.75)	7.138** (2.03)
Management Ownership	–1.188 (–0.92)	–1.006 (–0.78)	–1.235 (–0.98)	–2.106 (–1.48)	1.540 (0.31)
Leverage	2.161* (1.72)	2.194* (1.75)	1.617 (1.30)	1.834 (0.85)	1.377 (0.83)
Administrative Expense/Sales	0.270 (0.10)	0.328 (0.12)	–0.153 (–0.06)	2.419 (0.72)	–4.834 (–0.91)
Sales/Assets	–0.385 (–1.14)	–0.417 (–1.24)	–0.383 (–1.16)	–0.924 (–1.57)	–0.036 (–0.08)
Liquidity	–0.031 (–0.31)	–0.013 (–0.13)	–0.030 (–0.30)	–0.054 (–0.47)	0.033 (0.11)
Sales Expense Growth	0.002** (2.29)	0.003** (2.44)	0.002** (2.46)	0.006*** (3.93)	–0.107 (–0.33)
Year and industry fixed effects	Yes	Yes	Yes	Yes	Yes
Constant	–3.294 (–0.96)	–3.068 (–0.90)	–1.451 (–0.43)	–7.749* (–1.80)	–0.750 (–0.19)
Observations	303	303	303	129	174
Pseudo-R square	0.376	0.386	0.409	0.711	0.386

Note: Regression models of the interaction effect of prior deal size and overseas experience on positive coverage related to Chinese M&A announcements during 2008–2018. Robust standard errors are reported in parentheses; ∗∗∗, ∗∗, and ∗ denote significance at the 1%, 5%, and 10% levels, respectively.

Source: Authors formation.

Table 7. Interaction effect of deal size and overseas experience on media attention.

Independent variables	Total sample			Non-SOE acquirers	SOE acquirers
	(1)	(2)	(3)	(4)	(5)
Prior Deal Size	–0.011 (–0.07)	0.005 (0.03)	–0.142 (–0.91)	0.075 (0.30)	–0.227 (–1.07)
Overseas Experience Dummy		1.730** (2.56)	–11.860*** (–3.29)	–20.800*** (–3.57)	–1.868 (–0.37)
Overseas Experience Dummy× Prior Deal Size			2.314*** (3.83)	4.072*** (4.26)	0.326 (0.38)
SOE	0.147 (0.31)	0.155 (0.33)	0.254 (0.55)
Deal Size	1.175*** (7.80)	1.157*** (7.71)	1.154*** (7.79)	0.883*** (3.61)	1.254*** (6.51)
Completed Dummy	–1.692** (–2.43)	–1.677** (–2.42)	–1.779*** (–2.60)	–1.985** (–2.51)	–3.684** (–2.44)
Overseas Deal Dummy	0.926 (1.06)	0.919 (1.06)	0.966 (1.13)	3.534*** (2.73)	–1.674 (–1.36)
Diversifying Dummy	–0.685 (–1.04)	–0.637 (–0.97)	–0.678 (–1.04)	–0.373 (–0.34)	–0.994 (–1.13)
ROA	11.790*** (2.85)	11.130*** (2.70)	9.751** (2.38)	9.468 (1.46)	7.573 (1.31)
Board Independence	5.294 (1.57)	4.922 (1.47)	4.518 (1.36)	1.854 (0.37)	10.140** (2.12)
Management Ownership	–1.974 (–1.47)	–1.865 (–1.40)	–2.012 (–1.53)	–2.697* (–1.86)	5.489 (0.75)
Leverage	2.389* (1.74)	2.476* (1.81)	1.740 (1.28)	3.190 (1.35)	–0.602 (–0.31)
Administrative Expense/Sales	3.615 (1.13)	3.768 (1.19)	2.981 (0.95)	5.398 (1.40)	–4.545 (–0.78)
Sales/Assets	0.0616 (0.15)	–0.002 (–0.00)	0.030 (0.07)	–0.601 (–0.76)	0.350 (0.67)
Liquidity	0.011 (0.09)	0.031 (0.24)	0.018 (0.14)	0.003 (0.02)	–0.316 (–0.87)
Sales Expense Growth	0.003* (1.72)	0.003* (1.90)	0.003* (1.91)	0.005** (2.39)	–0.223 (–0.71)
Year and industry fixed effects	Yes	Yes	Yes	Yes	Yes
Constant	3.083 (0.60)	3.160 (0.61)	4.878 (0.96)	–11.570** (–2.15)	–8.249 (–1.57)
Observations	612	612	612	282	330
Pseudo-R square	0.292	0.301	0.319	0.493	0.293

Note: Regression models of the interaction effect of prior deal size and overseas experience on media attention. Robust standard errors are reported in parentheses; ∗∗∗, ∗∗, and ∗ denote significance at the 1%, 5%, and 10% levels, respectively.

Source: Authors formation.

Table 8. Comparison between state-controlled media and market-oriented Media.

Independent variables	State-controlled media attention			Market-oriented media attention
	Total sample	Non-SOE acquirers	SOE acquirers	Total sample	Non-SOE acquirers	SOE acquirers
	(1)	(2)	(3)	(4)	(5)	(6)
Overseas Experience Dummy	0.303 (1.14)	0.603* (1.79)	–0.058 (–0.14)	0.354*** (2.96)	0.842*** (4.08)	–0.015 (–0.11)
SOE	0.219 (1.19)			–0.033 (–0.40)
Deal Size	0.483*** (8.33)	0.394*** (4.81)	0.530*** (6.23)	0.158*** (6.07)	0.142*** (2.83)	0.155*** (5.58)
Completed Dummy	–1.094*** (–4.01)	–0.910*** (–3.42)	–2.579*** (–3.78)	–0.153 (–1.24)	–0.145 (–0.89)	–0.298 (–1.34)
Overseas Deal Dummy	0.011 (0.03)	0.523 (1.20)	–0.493 (–0.89)	0.150 (0.98)	0.853*** (3.19)	–0.433** (–2.39)
Diversifying Dummy	–0.422 (–1.63)	–0.279 (–0.77)	–0.627 (–1.58)	–0.016 (–0.14)	0.095 (0.42)	–0.196 (–1.52)
ROA	3.427** (2.12)	4.109* (1.88)	2.004 (0.78)	1.277* (1.75)	0.838 (0.62)	0.825 (0.98)
Board Independence	–0.075 (–0.06)	–0.769 (–0.45)	1.965 (0.91)	0.915 (1.54)	0.621 (0.59)	1.891*** (2.69)
Management Ownership	–0.437 (–0.83)	–0.522 (–1.06)	2.586 (0.79)	–0.301 (–1.28)	–0.399 (–1.32)	0.308 (0.29)
Leverage	1.005* (1.87)	2.119*** (2.69)	0.152 (0.17)	0.407* (1.69)	0.786 (1.63)	–0.128 (–0.45)
Administrative Expense/Sales	2.225* (1.78)	3.419*** (2.61)	–1.308 (–0.50)	0.221 (0.39)	0.338 (0.42)	–0.556 (–0.65)
Sales/Assets	–0.0520 (–0.32)	–0.299 (–1.11)	0.125 (0.53)	0.017 (0.23)	–0.039 (–0.24)	0.051 (0.67)
Liquidity	0.011 (0.22)	0.023 (0.46)	–0.050 (–0.30)	0.024 (1.06)	0.020 (0.65)	–0.028 (–0.53)
Sales Expense Growth	0.002*** (2.89)	0.002*** (3.50)	–0.174 (–1.24)	0.0004 (1.41)	0.001*** (2.75)	–0.058 (–1.28)
Year and industry fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Constant	–0.312 (–0.16)	–2.987* (–1.72)	–2.549 (–1.11)	–2.041** (–2.26)	–2.846*** (–2.67)	–1.179 (–1.58)
Observations	612	282	330	612	282	330
Pseudo-R square	0.304	0.483	0.273	0.269	0.434	0.246

Note: Regression models of the effect of overseas experience on media attention by state-controlled media and market-oriented media. Robust standard errors are reported in parentheses; ∗∗∗, ∗∗, and ∗ denote significance at the 1%, 5%, and 10% levels, respectively.

Source: Authors formation.

Table 9. PSM estimation.

Variables	Panel A: Before matching overseas experience					Panel B: After matching overseas experience
	Without overseas experience		With overseas experience		Homogeneity across means	Without overseas experience		With overseas experience		Homogeneity across means
	N	Mean	N	Mean		N	Mean	N	Mean
Media Attention	569	1.656	43	3.558	−1.903***	40	0.725	40	2.100	−1.375**
Positive Stock	277	1.559	26	2.890	−1.331**	14	0.833	23	1.791	−0.958
State Positive Stock	220	0.973	18	1.411	−0.438*	11	0.792	16	1.128	−0.336
Market Positive Stock	77	0.529	10	0.980	−0.451**	5	0.395	9	0.502	−0.107
Prior Experience Dummy	569	1.000	43	1.000	0.000	40	1.000	40	1.000	0.000
Gap Days	569	1091.476	43	1025.465	66.011	40	907.425	40	998.050	−90.625
Deal Size	569	6.244	43	6.409	−0.165	40	5.816	40	6.282	−0.466*
Completed Dummy	569	0.924	43	0.930	−0.006	40	0.950	40	0.925	0.025
Overseas Deal Dummy	569	0.040	43	0.070	−0.029	40	0.050	40	0.050	0.000
Diversifying Dummy	569	0.102	43	0.070	0.032	40	0.125	40	0.075	0.050
SOE	569	0.538	43	0.558	−0.020	40	0.450	40	0.575	−0.125
ROA	569	0.042	43	0.060	−0.019**	40	0.063	40	0.052	0.011
Board Independence	569	0.367	43	0.372	−0.005	40	0.375	40	0.366	0.009
Management Ownership	569	0.093	43	0.072	0.021	40	0.111	40	0.076	0.035
Leverage	569	0.488	43	0.471	0.017	40	0.418	40	0.469	−0.050
Administrative Expense/Sales	569	0.098	43	0.081	0.017	40	0.094	40	0.084	0.010
Sales/Assets	569	0.649	43	0.914	−0.264***	40	0.708	40	0.808	−0.100
Liquidity	569	1.805	43	1.619	0.186	40	1.779	40	1.626	0.153
Sales Expense Growth	569	7.267	43	0.328	6.939	40	0.236	40	0.324	−0.088

Source: Authors formation.