Media corruption perceptions and US foreign direct investment

ABSTRACT Media play an important role in shaping people’s beliefs and ideas. More specifically, media have a great influence on what we think about foreign countries. The media influence the way a country’s citizens view the people and governments of other countries and shape our image of them. All types of articles about foreign countries are covered in the media. Investors looking to invest abroad certainly pay attention to what is reported in the media about corruption in other countries. Since corruption plays a huge role in investment decisions, this paper investigates the role of corruption coverage in Wall Street journal on US foreign direct investment outflows. We find that an abundance of corruption stories about a specific country in The Wall Street Journal can demotivate investors and reduce the amount of US foreign direct investment outflows to that country.