News Limited chairman John Hartigan said the review would be conducted to reassure the public that illegal phone-hacking practices which felled British tabloid the News of the World had not taken place among his newspapers.
The Australian-listed shares in News Corp dived another three percent Wednesday, adding to the 4.5 percent slump Tuesday which sent shares to their lowest point in more than 18 months, as the fallout from the scandal deepened.
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"Some media outlets, certain commentators and some politicians have attempted to connect the behaviour in the UK with News Limited's conduct in Australia," Hartigan said in a statement to staff.
"This is offensive and wrong."
But Hartigan said News Limited would conduct a "thorough review of all editorial expenditure over the past three years to confirm that payments to contributors and other third parties were for legitimate services."
"I have absolutely no reason to suspect any wrongdoing at News Limited," he said, but added that the review will help affirm the "essential" public trust in the ethical work practices of the company's employees.
Misconduct allegations which saw Murdoch close the best-selling tabloid after a final edition last Sunday have rocked his global empire, hitting his bid for pay TV giant BSkyB and threatening to spill over to the United States.
Britain's coalition government looked set to back opposition calls for Murdoch to drop his bid for BSkyB and a committee summoned him to answer questions on phone hacking.
In the United States, now the 80-year-old media baron's home, a key lawmaker called for a probe into whether the alleged hacking had extended to US citizens and warned of "severe" consequences if it proved to be the case.
CMC Markets analyst Ben le Brun said the Australian shares of News Corp "just fell like a stone" through Wednesday after a brief rally at the open likely linked to plans announced in the US for a share buyback to stem losses.
"Certainly the news flow, from all corners of the globe now, is not a good thing for News Corp," Le Brun told AFP.
News Corp's Australian stock ended down 2.96 percent Wednesday at Aus$14.74 (US$15.68) as local arm, News Limited, condemned as "offensive and wrong" any suggestion linking it to the illegal phone-hacking scandal which felled British tabloid the News of the World.
News Corp shares worth some Aus$228 million had changed hands Wednesday, which was a "very significant" volume, he added, particularly given the overall market closed in positive territory.
"It's clearly under pretty significant selling pressure," said Le Brun.
