Going global or fleeing abroad? Scandal coverage and corporate internationalization in China

How does media coverage of corporate scandals shape firms’ cross-border strategic decisions? Using Chinese A-share listed companies from 2007 to 2024, this study finds that scandal coverage intensity significantly promotes corporate internationalization, a result robust to instrumental variable estimation, propensity score matching, and placebo tests. Three mechanisms are identified: media-amplified regulatory pressure motivates overseas expansion to circumvent domestic institutional constraints; media-induced financing disruptions compel firms to seek alternative capital abroad; and media-amplified reputational damage drives compensatory overseas market entry. These effects are more pronounced among firms with higher scandal severity, financial-background executives, family ownership, and overconfident managers. It is also significantly stronger when misconduct is reported by nationally circulated media outlets and when such coverage carries higher negative sentiment intensity. These patterns indicate that both media reach and evaluative tone are central to the transmission of scandal effects into cross border strategic responses. Additional tests rule out asset tunneling and managerial career concerns as primary explanations. We further show that the value consequences of scandal induced internationalization are conditional on firm capabilities: overseas expansion improves firm value only among firms with stronger technological advantages and better governance quality. Our findings provide evidence on how financial media coverage of corporate scandals influences firms’ internationalization decisions and cross border resource allocation.