The Impact Of Media Attention And Executive Position Changes On Corporate Performance

Under the background of "separation of two rights" of modern enterprises,how to solve the agency problem between shareholders and managers,establish a reasonable and effective manager incentive and restraint mechanism,and maximize the interests of corporate shareholders have always been an important issue in corporate governance research.Corporate governance is divided into internal governance mechanisms,such as the supervision of the board of directors and the board of supervisors;and external governance mechanisms,such as laws and regulations,the market for control rights and media attention.In recent years,with the rapid development of the media,the supervisory role of the media as an external corporate governance mechanism continues to appear.The pursuit of social reputation and commercial interests forced them to take the initiative to discover and expose on corporate violations of the company's laws and regulations.In consideration of their own reputation,companies and managers will try to reduce the exposure of negative news,restrict them from regulating their own behavior,and thus play the role of supervising the problem of corporate governance.Based on the theoretical analysis,this paper selected eight companies,namely Wells Fargo Bank,Toshiba Corporation,Hewlett-Packard,CITIC Securities and Founder Technology,to conduct multiple case studies,it discussed how the media attention as a "fourth power" that is independent of the administration,justice,and legislation under the circumstances of the failure of internal corporate governance mechanisms,has affected the changes of corporate senior executives,and thus played an external corporate governance role,and further explored the impact of executive changes on corporate performance.Through the induction analysis of the selected case companies,it was found that the media led to the change of positions of senior executives through three different governance mechanisms:corporate governance path,reputation governance path,and administrative governance path.In the corporate governance path,related media coverage will affect the company's reputation,and in order to defuse the adverse effects of negative reports as soon as possible,the company will make senior executives take on the role of "scapegoats" to show their determination in strengthening corporate governance.In terms of reputation governance path,the media mainly influences their personal reputation through relevant reports on senior executives,which in turn affects their position and value in the professional manager market,at this time,the executives of the scandals often decide to resign in order to retain their remaining image.In the path of administrative governance,media coverage will attract the attention of the government and relevant regulatory authorities,and conduct in-depth investigations of companies with doubts.Therefore,executives who violate the law and regulations will be punished by the administrative and judicial department.And the change of executives will lead to changes in the internal and external social capital that the former executives bring to the corporation,the internal social capital is manifested as the management team and corporate culture centered on the former executive,the change of executives not only affects the loyalty of other members of the management team,but employees also need to adapt to the leadership of.new executives,and breaking the original mode of operation brings great organizational costs to the corporation.External social capital of senior executives is the "relationship" between executives and other stakeholders such as suppliers,customers,and governments,a good relationship can help the executive team get favorable information,resources,and cooperation opportunities,and the external social capital will not exist after the change of senior executives.In summary,due to the increase in internal organizational costs and the loss of external social capital of the original executives after the change of senior executives,it will eventually lead to a decline in corporate performance.Finally,this paper puts forward suggestions on how to strengthen the independence of the board of directors,how to make rational use of the media supervision mechanism,and the perfection of the manager market in China.