The Impact Of Media Attention On Market Reaction Of Listed Companies After Violations

Listed companies are essential assets in the capital market and serve as a common source of interest for all parties.However,with the increase in both scale and number of listed companies in recent years,violations have become more frequent and disruptive to the market’s normal order.These violations harm investors’ legitimate interests and significantly affect the stable development of the capital market.As a vital participant in the capital market,the media plays a critical role in transmitting market information,attracting investors’ attention,and promoting market transactions.Technological advancements have significantly improved the communication power and influence of the media,making their role in the capital market increasingly important and complex.The unique media environment in China has led to different market positioning,reporting subjects,and narrative styles for media with different attributes.Media attention with varying emotional tendencies can also significantly impact investor behavior and price decisions in the market.Despite the continuous attention of both industry and academia,existing research on the impact of the media on the capital market has focused primarily on the post-communication of a company’s stock price and the pre-supervision role of the media in company violations.Therefore,this paper aims to explore the influence of the media’s prior attention on the market’s reaction to listed company violations in the context of China’s media industry and capital environment.By enriching the literature on the role of media in asset pricing and consequences of listed company violations,this paper provides ideas for theoretical research and practical guidance.This paper investigates the role of the media in asset pricing and empirically tests the impact of media attention on market reaction following a violation.The study examines the heterogeneity of the effect of media attention type and emotional orientation by analyzing non-financial violations of A-share listed companies from 2016 to 2020.The research findings reveal that:Firstly,the media’s pre-attention to listed companies has a significant negative impact on the market reaction after violations occur.Secondly,network media attention and policy-oriented media attention show significant negative correlations with market reaction after corporate violations,while the effect of market-oriented media is limited.Thirdly,negative and positive media attention have a more significant negative relationship with the market reaction after a company violates the rules,as compared to neutral media attention.Lastly,further research reveals that media attention has a more negative impact on market reaction for non-state-owned enterprises.This paper examines the impact of media attention on the capital market,focusing specifically on the influence of pre-attention on the market’s reaction to a company’s violation.The study classifies media attention into two criteria,providing empirical support for a comprehensive investigation into the effect of media attention.Based on the research findings,this paper recommends that the media strengthen content management and industry collaboration,leveraging the unique advantages of different types of media.Companies should establish two-way relations with the media and engage in positive interactions,while prioritizing legal and compliance operations.Investors should evaluate market information transmitted by various media carefully and improve their ability to exercise independent judgment and risk awareness.Regulators,meanwhile,should harness media resources to enhance capital market supervision and promote high-quality development in both the media industry and the capital market.