Do ads influence editors? Advertising and content biases in the financial media

The independence of editorial content from advertisers’ influence is a cornerstone of journalistic ethics. In this paper we test whether this independence is observed in practice in the financial print media. We find that some publications that recommend mutual funds are more likely to recommend those of past advertisers, controlling for observable product characteristics such as sales loads, expenses, size, and past returns, as well as the fund family’s general level of print advertising. This partial correlation is present for all three personal finance magazines we examine (Money, Kiplinger’s, and SmartMoney) but absent for the New York Times and Wall Street Journal. Recommendations of the financial media are shown to be an important determinant of fund inflows. Consequently, if we interpret the correlation causally, a non-trivial share of the return to advertising in a personal finance magazine comes via biased recommendations, rather than via the direct effect of advertising.