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. •We construct a novel official media tone on new energy through BERT.•The official media tone positively influences Chinese new energy stock returns.•The official media tone delivers valuable information on new energy to the market.•The official media tone contributes to equity financing of new energy firms in China.•The official media tone affects corporate development through the equity financing channel.