Media Coverage And The Development Of Capital Market

Despite the increasing recognition that the news media function as an important information intermediary and public monitoring mechanism, there is limited evidence regarding whether, and how the media contribute to financial information flows and decision-making (Dyck and Zingales,2002; Miller,2006). To date, there is very limited empirical evidence, most of which comes from the Western world (mainly the United States), supporting any one of these theories.This paper empirically investigates how financial media coverage affects stock return and the quality of listed companies'information disclosure to invest or trade in particular stocks in China, for the first time in the literature.Compared with previous studies, This article is based on Chinese capital market reality,Given the lack of a well-established model for, and measure of, media coverage, we propose a comprehensive empirical proxy for news coverage using the number of times a company that is mentioned in the press that takes into account both the quality and the quantity of newspaper reports. The main structure and viewpoint is as follows:Chapter 1 is the preface. The research background and significance are proposed, relevant research are explained, research methods and possible innovations are also introduced.Chapter 2 reviews the literature on the roles and effects of the media in asset pricing and corporate governance. Through the previous review of the literature, We have found that the research on the roles and effects of the media of capital market mainly from two sides of the expanded:One school of thought questions the validity of the press as an important information intermediary and even suggests it may play a Positive role, Another school of thought, following Dyck and Zingales (2002), Stiglitz (1999,2002) and others, holds that the press plays a positive role in corporate finance and corporate governance, politics as well as economic development, by promoting transparency through information dissemination to a broad audience, and by placing public pressure on managers, politicians, and regulators.Chapter 3 analyzes China financial media and capital market development. We first analyzes the roles of China's financial media in capital market development stages. And then base on the finance and Economics information asymmetry theory and method,we analyzes the two main financial media functions. Also,we reviews the literature on the roles and effects of the media in china stock market.so far, however, there are no systematic studies conducted in China that support the notion of the financial news media conveying useful information to investors or influencing key stakeholders.Chapter 4 Using the event-study methodology and multivariate regressions, we examine the intensity of media coverage, its determinants and its marginal effect on stock returns following corporate donations by China A-share firms immediately following the 5.12 Wenchuan Earthquake. First, our results show that news coverage increases with the social consequences of the corporate donations. Second, to deal with the fact that news coverage is determined simultaneously with stock returns, we suggest two valid and original instrumental variables:a measure of the firm's newsworthiness and a measure of daily news pressure at the time of the Earthquake. there is clear evidence that in the first days news coverage mitigates the market value increases. We interpret these results as evidence that investors are slow to recognize the extent of the increases associated with the public implications of news coverageChapter 5 analyzes the relationship between the media corverage and the quality of listed companies'information disclosure.we manually collect the negative coverage on the financial media about Chinese listed firms as the proxy of media coverage and explores how media coverage affects one-period-lagged the quality of listed companies'information disclosure in China's stock market. This paper shows that media could play a role of corporate governance for Chinese listed firms.Chapter 6 describes the development, significance and obstacles of China's media market.from the finance and economics theory, we analysze the two major functions for financial media's problems and causes. On this basis, to suggest how to make full use of the functions of the financial media and promote capital market development.Our paper makes some main contributions to the literature. First, by documenting a relation between news coverage and stock return and a relation between news coverage and the quality of listed companies'information disclosure in China, we extend research conducted in other institutional contexts (e.g. Fang and Peress (2009) and Joe, Louis and Robinson (2009) in the United States; Dyck, Volchkova and Zingales (2008) in Russia) on the effects of the media on financial market and corporate governance outcomes. Second, we empirically test the relative validity and explanatory power of two alternative measures of news coverage, for the first time in the literature.third, Apart from exploring the possible reasons for conflicting findings in prior research with respect to the effects of media coverage in the stock market, the findings from such a direct comparison contribute to the unresolved debate on the channel through which the media exert an effect, i.e. whether media effects are derived from media coverage alleviating information problems (e.g. by conveying substantive, perhaps new, information), or from media coverage breeding familiarity or grabbing investors(or other stakeholders) attention.