A Study On The Influence Of Negative Media Coverage On Financial Restatement

Recent years,more and more listed companies in China used the method of disclosure correction or supplementary announcement to restate company's earlier disclosure of financial statements after the release of financial report.To some extent,this kind of financial restatement behavior reflects the low quality and credibility of accounting information quality.As the phenomenon of financial restatements of listed companies become more and more serious,it is not conducive to play the governance and pricing function roles of financial accounting information in capital market,but also seriously affects capital market to play its resource allocation function,meanwhile,damages the interests of investors.But,the occurrence of financial restatement behavior is not only due to company's accounting omissions,but also companies' management to whitewash their financial results,so as to achieve excepted results.The financial restatement behavior of listed companies is essentially a problem of corporate governance,that management didn't found errors in financial report timely when it being announced.It gradually improved in Newspapers,magazines and other traditional media,network,television,forums,online bars and other new media platforms also constantly emerging,These media are more and more concerned about behaviors of enterprises,which broadens the ways of investors to obtain corporate information and investors are easily getting more corporate information.The external supervision of media is becoming increasingly prominent.In recent years,there have been more financial fraud of listed companies are being revealed by media,then making in-depth investigation by media,causing social concern and government departments' taking investigation,lastly revealed the truth.This paper analyze possible causes of financial restatement of listed companies and mechanism of media reports,influence on corporate governance,insisting that negative media coverage mainly reflect the probability of financial restatements of listed companies through three ways,including reputation mechanism,the involvement of administrative regulatory agencies and capital market's pressure mechanism.So,this paper takes the A shares of all listed companies in China in 2014 to 2015 as research objects,exploring the relationship between negative media coverage and financial restatements.Then,this paper divides financial restatements into negative and another one according to types of restatements,and studies media coverage's effects on it.Then,the paper divides samples into two groups according to the nature of ultimate control,including state owned and non-state-owned,trying to study the relationship between negative media coverage and financial restatements in different groups.Finally,this paper tests the robustness using the negative media reports as an alternative variable of negative media coverage.Results show:(1)There is a significant positive correlation between negative media coverage and companies' financial restatement,which indicates that there is a greater possibility of financial restatements of companies with negative media coverage.(2)There is a significant positive correlation between the number of negative media reports and companies'financial restatement,which shows that the probability of financial restatements increases with the increase in the number of negative media reports.(3)There is a significant positive correlation between the number of negative media reports and negative financial restatements,which indicates that the more negative media reports,the more likely the negative financial restatements occur.(4)In non-state-owned group,the impacts of negative media coverage on financial restatement are more significant,the impacts of negative media coverage on negative financial restatement are more significant.Finally,combined theoretical analysis with empirical analysis,this paper puts forward some suggestions to improve the corporate governance structure and supervision system of listed companies,perfect the legal accountability mechanism and improve the civil compensation mechanism,and improve the media environments.