Media Coverage And Corporate Innovation

Enterprises are significant participants in economic activities,and media coverage possesses a twofold impact on them: On the one hand,media reports,through inform ation intermediaries and regulatory mechanisms,have demonstrated an unequivocal ability to yield a positive influence on enterprises.On the other hand,media coverage has the potential to impede enterprise growth,through the market pressure and the biased reporting.Innovation,without question,stands as the cornerstone of enterprise competitiveness and serves as a critical component in China’s ambitious transformation towards high-quality development.This article examines the possible influence of media coverage on enterprise innovation from a dual perspective,with the goal of offering some direction on how to stimulate enterprise innovation.Based on the theories of information asymmetry,agency theory,and managerial myopia,this article has collected relevant financial data of listed companies from 2010 to 2020 and conducted a study from the positive and negative effects of media coverage,discovering that media coverage has a significant promoting effect on enterprise innovation.This implies that the positive effects brought by information interpretation mechanisms and regulatory governance mechanisms outweigh the negative effects when the positive and negative effects of media coverage are simultaneously in action.In the test of enterprise heterogeneity,this article grouped enterprises based on industry competitiveness,property rights,and major shareholder ownership proportion,and found that the promoting effect of media coverage on enterprise innovation is only significant for non-state-owned enterprises and competitive industries,in terms of both the quantity and quality of innovation.For innovation quality,the promoting effect of media coverage on enterprise innovation is only significant when there is equity dispersion.In exploring the influencing mechanisms,this article explored the influence of media coverage on enterprise innovation from both positive and negative perspectives.The positive effects of media coverage’s information interpretation and regulatory governance mechanisms have resulted in a dual increase in the quality and quantity of enterprise innovation,by alleviating financing constraints and identifying R&D manipulation.The negative effects of media coverage through market pressure exacerbate managerial myopia and hinder enterprise innovation.Due to the special characteristics of China’s patent market,this negative impact only manifests in the quality of innovation rather than quantity.In the robustness test,this article used the method of replacing the independent variable of media coverage,replacing the dependent variable of enterprise innovation,and using the fixed effect model to test.The positive correlation between media coverage and enterprise innovation remains significant.In addition,this article also used PSM and instrumental variable methods to control for possible endogeneity issues,and the results remain robust.In further research,this article explores the relationship between media coverage sentiment and firm innovation and finds that positive media sentiment and negative media sentiment have exactly opposite effects on firm innovation,with the former promoting and the latter hindering,respectively.With positive media coverage being the majority in China’s market,it provides another possible explanation for the positive net effect of media coverage on enterprise innovation.Based on these results,this article makes some suggestions to firms,media and government to harness the power of media to enhance corporate innovation and propel the growth of national innovation.