No. 129: Press Coverage of Tax Reforms and Interest Groups

Abstract

This study investigates whether interest groups influence the textual sentiment of press coverage of tax reforms. 2SLS- and OLS-estimates as well as the application of a modified control function approach suggest that this relationship exists. In particular, I identify increases in the differences among represented opinions (subjectivity effect). This translates into relative increases in both the positive and negative textual sentiment within an article in which an interest group appears. My study contributes to the ongoing discussions regarding the costs (influence seeking) and benefits (providing expertise) of interest group activities in standard setting by shedding light on an outside tactic of interest groups that is nearly impossible to regulate. Thereby, I also point at the press’s role as information intermediary when it interacts with other economic agents.