The effect of media coverage on disciplining firms' pollution behaviors: Evidence from Chinese heavy polluting listed companies

With mounting concerns about environmental deterioration worldwide, a great number of researchers highlight the important role of media coverage in disciplining firms' pollution behaviors. By integrating the behavioral theory of the firm with the literature on the disciplining power of the media, this study extends understanding of the disciplining power of the media by showing how firms enact largely symbolic green acquisition to respond to media coverage about their pollution behaviors, essentially to protect managerial interests. Media coverage disciplining the pollution activities of listed Chinese firms in industries categorized as polluting from 2012 to 2016 provides strong support for the study's hypotheses. The results demonstrate that media coverage of a firm's pollution incident has a significantly positive effect on the likelihood of the firm's subsequent green acquisition. For firms with media coverage of its pollution practice, green acquisitions inhibit the subsequent environmental investment, indicating green acquisitions are more likely to be symbolic impression management or a decoupling tactic rather than investment in green transformation. Past poor performance on profitability can strengthen the likelihood that symbolic green acquisitions are adopted to respond to negative coverage of pollution practices, while the existence of state-owned shareholders can reduce this likelihood. This study provided quantitative evidence about the media's disciplining firms' pollution behaviors which is conducive to policymaking and improving firm pollution control. (C) 2020 Published by Elsevier Ltd.