When Newspapers Fail to Deter Corporate Illegality: The Constraining Effects of Economic Institutions

Abstract

Social control agents aim to restrict corporate illegality, yet its prevalence highlights inconsistencies in enforcement mechanisms. To explore this issue, we examine how newspapers reduce corporate illegality by imposing ethical norms on firms. Analysing data from firms in 29 countries, we find that higher newspaper reach is only moderately associated with lower levels of corporate illegality due to key boundary conditions. Specifically, we leverage institutional anomie theory as a framework to identify and test three ways in which economic institutions constrain newspapers' ethical norm-setting role. The negative association between newspaper reach and corporate illegality is weakened in countries with strong cultural pressure to succeed or pervasive economic penetration into newspapers. However, firm-level shareholder orientation does not moderate this relationship. These findings highlight the importance of contextualized analyses of media landscapes and the role of economic institutions in undermining social control processes.