News Media:The Disruptor Or The Guardian Of The Capital Market

In today’s informational era, the media has been impact on people’s lives all the time.Along with our country’s investors have become increasingly mature, as the“representative of the fourth party right”, media’s influence on capital market also received extensive attention from the theory and practice.In this paper, we use the accrual anomaly as a starting point to study the influence of the media on the pricing efficiency of the capital market in the long term of the capital market.Does the accrual anomaly exist in the current capital market of our country? If it does, the news media coverage of listed companies can reduce the accrual anomaly or not?These problems still exist differences in the theoretical circle and this paper will carried out on these two questions.In this paper, we use the Shanghai and Shenzhen 300 listing Corporation from2007 to 2014 as the sample data and also use the CNKI“important newspapers full-text database in China” by the way of manual search keywords which as the proxy variable of the number of media reports,in order to study the existence of accrual anomaly and the impact of media coverage on the accrual anomaly.We also have used the Heckman two step method to solve the selection bias of news media.The results show that: Firstly, from the point of view of each part of the earnings, the persistence of earnings from cash flow is greater than that of earnings from accruals.Secondly, China’s current capital market significantly exist the accrual anomaly.Thirdly, the media coverage can significantly reduce the existence of accrual anomaly in our country.Fourthly, Our investors just mispricing the accruals, but did not underestimate the persistence of earnings from cash flows.The empirical research in this paper provide a strong support on perfecting the external development environment of our country’s media and to improve its influence in order to improve the efficient of the capital market.