Media Governance And Capital Cost

As China’s comprehensive power has been continuously strengthened, the media industry also has considerable development. As an intermediary to transfer information, media plays an important role in society. Media is not only the intermediary to disseminate information, but also the role to supervise the society like the legislative institution, administrative institution and also the judicial community. The healthy development of the international media is not only related to the political, social and livelihood, but also have an impact on the level of corporate governance. Thus, more and more scholars begin to do some research related to media governance. The cost of capital is always an important indicator in finance, and also a hot issues in the academic research. It plays an important role in the field of enterprise project decisions and investment decisions. There are many factors to affect the cost of capital, but do the media as an external environmental governance have an impact on the company’s cost of capital? What is the relationship between the media governance and the cost of capital?To answer these questions, according to the theories of corporate governance, the theories of the capital cost. Make the corporate cost of capital as a starting point combining empirical study to explore the influence of media on the cost of capital. Media governance will use media attention as agent variable. That is the number of listed companies has been reported. The capital cost will be discussed separately by the cost of equity and debt. This paper will start from all non-financial listed companies in 2008-2012, and we get 1423 sample observations after a series of selections. Then we will control a series of variables which will affect capital costs such as β and liquidity. Finally, we will use OLS to test the relationship between media governance and capital cost. The results show that:(1) Media governance will reduce the cost of capital. It means the more news reported by media about the company, the less cost of capital the company will be. (3) Through the further study, we found that the negative reports in the media reports may weaken governance in reducing the company’s cost of capital.This paper explores the relationship between media governance and the cost of capital innovatively. It enriches the study of modern financial theory system and expands the field of media governance research. Meanwhile, the paper also proposes some suggestions to the problems of the media market and capital market at this stage. It is benefits to the development of China’s media market and capital market, and it makes a contribution to reduce financing costs and to improve investor protection.