The Influence Of Media Attention On The Investment And Financing Decisions Of Independent Directors Research

The independent director system has already been introduced into China more than ten years, although the academia has never stopped on the discussion of the independent director system, how to improve the effectiveness of independent directors’ decisions still deserve further study. As protectors of the medium and small shareholders’ interests, independent directors play the key role of supervision on large shareholders and management in the listed companies, so they pay more attention to the the reflects on the level of investment and financing of listed companies such as agency conflict problems. However, the effect of the independent director to perform the functions of supervising and advising, is often limited to the listed companies’ internal corporate governance environment, leading to the opinions of independent directors less free and independent. As one of external corporate governance mechanisms, Media can influent the reputation of listed companies and boards of directors in the industry by the reports of listed companies. Thus to some extent, media can spur independent directors to perform their supervisory functions actively. This is important to explore the laws of the relationship between the media role in corporate governance and the effectiveness of independent directors’ decision, to perfect the independent director system by regulators, and to improve the efficiency of corporate governance of listed companies.Based on the principal-agent theory, information asymmetry theory, prospect theory and reputation signal theory, reviewing the research of scholars in the past, using the financial data of listed companies in our country and statistical methods, we study the relationship between media attention and the investment and financing decisions of independent directors. In this paper, we make the independent directors’ objection to the investment and financing decision of listed companies as explained variable, and innovatively measure media attention as enterprises’ reputation from the company level and balance degree of independent directors’ reputation from the board level. Then we discuss the mechanism of corporate governance of media attention, and further distinguish the mechanism between different levels of investment and financing of listed companies to study the differences between causes of investment and financing decisions of independent directors. The empirical results show that each of the listed companies’ media attention and the balance degree of independent directors’ reputation in the board of listed companies remains a positive relationship with investment and financing decisions of independent directors. This positive relationship is more significant in companies with more excessive investment and lower levels of debt financing. According to the conclusion, we put forward suggestions about the role in improving corporate governance of media and the way to improve the effectiveness of independent director system.