Is the tone of the government-controlled media valuable for capital market? Evidence from China's new energy industry

This study examines the influence of the tone used by government-controlled media on the stock prices of new energy firms. By applying BERT, a large language model, we quantify the tone of the new-energy-related articles published by the primary government-controlled media of China. We find that the government-controlled media tone positively and significantly influences the short-term returns of new energy stocks. By comprehensively performing mechanism analysis, we show the government-controlled media tone plays a key role in communicating information rather than triggering stock price overpricing. We further find that the official media tone influences equity financing cash flows of new energy firms and in turn affects their asset expansion, investment and R&D activities. Overall, our findings reveal that the government-controlled media tone contains fundamental information valued by the investors and the information ultimately influences the development of Chinese new energy industry through affecting the corporate real activities.