This study investigates whether and how the central discipline inspection of the securities regulators affects the information environment and investor valuation in the Chinese capital market. Based on the private equity placement (PEP) events, we find that the self-interested media outlets provide more negative coverage of the passed PEP firms during the inspection period than those passed outside the inspection period, resulting in poorer stock returns. Additionally, we find that the negative effect of the inspection on the PEPs’ market reactions is attenuated in media-connected firms and firms with higher advertising expenditure. However, we do not find significant long-term market performance differences between the passed PEP firms during the inspection period and those passed outside the inspection period. Additional results show that during the inspection period, the securities regulators tend to approve the PEP applicants with better initial announcement returns. Moreover, sophisticated investors pay a higher price for the shares of these passed PEP firms during the inspection period. Collectively, our findings suggest that anti-corruption campaigns have unintended effects that hinder retail investors’ access to objective information.