Silence the media or the story? Theory and evidence of media capture

We propose a new theory of media capture where a principal can either influence journalistic investigation (internal capture) or let the media investigate and suppress stories at the publica-tion stage (external capture). We predict that the likelihood of internal capture increases with perceived corruption. Conversely, external capture increases with perceived corruption if the number of media outlets is large enough and decreases otherwise. Exploiting new survey data from Reporters Without Borders, we use the Panama Papers as a shock to perceived corruption to provide empirical support for our two predictions.