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Prof. Luo Zuo
Professor of Accounting
NUS Business School
National University of Singapore

Institutional investors increasingly hold substantial equity stakes in both media companies and industrial firms. When industrial firms become defendants in corporate litigation, media companies that are simultaneously held by these institutional investors tend to provide more lenient coverage of the defendants. This effect becomes more pronounced when institutions possess greater incentives and capabilities to exert influence over the media companies. Influenced media outlets also reduce their coverage of the defendants, especially articles related to legal matters. Subsequent to the lenient coverage, institutional investors gradually reduce their stakes in defendant firms and exhibit more favorable voting behavior concerning the management of these media companies. Our findings suggest that media outlets tend to slant their coverage of corporate litigation to cater to the preferences of large shareholders.