Media Coverage,Internal Control Quality And Stock Price Crash Risk

With the continuous promotion of market-oriented reform,a large number of high-tech and innovative enterprises have developed rapidly.In order to provide a new development platform for the new economy,the GEM came into being.Since the opening of the GEM on October 30,2009,the total market value of the listed companies on the GEM has exceeded 4 trillion yuan,which has become an important window for innovation and entrepreneurship in China.However,GEM companies generally have "three high" phenomena of "high issuing price,high P/E ratio and high fund raising".Once the company's performance fluctuates or faces downward pressure,GEM board will show a larger decline than the main board market.Compared with the companies on main board market,GEM companies have always had a more serious risk of stock price crash.With the rapid development of information technology and the popularity of the Internet,the media has played an increasingly important role in the social and economic life.On the one hand,the media play an intermediary role in information mining,disclosure and diffusion to enhance the transparency of information in the capital market,which can provide investors with timely and diversified information;on the other hand,the media play a supervisory role in corporate behavior reporting to restrain managers from hiding the bad news,which can reduce the agency conflicts.As an important driving force for social and economic development,the role of the media cannot be ignored.Therefore,we can't help thinking: Can media coverage effectively reduce the risk of stock price crash of GEM listed companies?Based on this,this paper takes China's Shenzhen GEM listed companies from 2014 to 2017 as the research sample.Distinguishing positive reports from negative reports to study the impact of media reports on the risk of stock price crash of listed companies.Furthermore,the interaction between internal control and media coverage in restraining the risk of stock price crash is further investigated.The results show that:(1)On the GEM,the more attention the listed companies receive from the media,the lower the risk of stock price crash will be.The more positive the tendency of media coverage is,the less likely the listed companies will have the risk of stock price crash.Further analysis finds that when the degree of marketization is high and analysts pay more attention to it,the negative correlation between media coverage and the risk of stock price crash is more significant.(2)By reducing the degree of information asymmetry and agency cost,internal control can play a positive role in restraining the risk of future stock price crash.(3)As the internal governance mechanism of a company,internal control and media coverage have complementary effects in restraining the risk of stock price crash.The contributions of this paper are as follows: Firstly,combining with the new situation of mass entrepreneurship and mass innovation in the period of economic transition in China,this paper studies the relationship between media coverage and the risk of stock price crash of listed companies on GEM,and draws a conclusion suitable for GEM.Secondly,we distinguish the positive and negative tendencies of media coverage and study their impact on the risk of stock price crash,which provides incremental empirical evidence for the relevant research of media coverage.Thirdly,in view of the external environment of the media,this paper further analyses the negative correlation between media coverage and the risk of stock price crash caused by the degree of marketization and analysts' attention,which provides a new way for future research.Fourthly,this paper examines the moderating effect of internal control system on the risk of stock price crash from the perspective of system construction,and further discusses the interaction between media coverage and internal control in corporate governance,expanding the research literature in the field of internal control.