Abstract

The ways in which media news is slanted can shape beliefs about the economy, thereby affecting the decision to start a new business. Using exogenous variation in the introduction of Fox News Channel across US counties, I find that increased exposure to a pro-Republican slant during a Republican administration is positively associated with new firm creation. This effect is more pronounced among less-educated entrepreneurs, who rely relatively more on the media to form their economic expectations. I further find that the newly created firms are of lower quality, as evidenced by lower survival rates, more job losses, and higher small business loan default rates.

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• Keyword(s):
• economic development 40
• strategy and entrepreneurship 186

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