The Corporate Governance Role of the Media

In this paper we discuss the role of the media in pressuring corporate managers and directors to behave in ways that are "socially acceptable".Sometimes this coincides with shareholders' value maximization, others not.We provide both anecdotal and systematic evidence that media affect companies' policy toward the environment and the amount of corporate resources that are diverted to the sole advantage of controlling shareholders.Our results have important consequences for the focus of the corporate governance debate and for the feasibility of reforms aimed at improving corporate governance around the world.