Foreign Ownership,media Attention And Stock Price Crash Risk

With the acceleration of the opening of China’s capital market,many Chinese companies choose to go to overseas capital markets to attract global investors.Foreign investors have gradually increased their influence in China’s market.The supervision of foreign shareholders on the company’s operation is conducive to reducing the degree of internal and external information asymmetry and improving the company’s management.Information asymmetry theory and principal-agent theory well explain the motivation of foreign shareholders to put forward higher requirements for corporate information disclosure and participate in the daily business behavior of the company more actively.At the same time,it is not uncommon for the company’s stock price crash due to the explosion of negative information in China’s market.The stock price crash risk as a profound impact on the stability of the company’s value.Studying the foreign ownership and stock price crash risk will not only help to understand the corporate governance role of foreign ownership and reduce the stock price crash risk,but also help to improve the company’s value and operating ability.The inhibitory effect of foreign ownership on the stock price crash risk has been recognized by some scholars,but there are still some problems in the research.Current research is still lack of research on the impact of foreign ownership on the stock price crash risk and other possible impact paths.In addition,scholars generally believe that foreign ownership is beneficial to corporate governance,but a few scholars believe that foreign shareholders’ is not conducive to corporate governance due to insufficient supervision of the company,such as Chen et al.(2013)and Kim et al.(2016).Based on this,this paper will study the new ways of foreign ownership affecting the stock price crash risk,and add the regulatory effect of media attention to respond to the existing problems.This not only has reference value for the introduction of foreign capital,but also brings new enlightenment for China to improve the external governance mechanism of media and reduce the stock price crash risk.This paper combs the literature on foreign shareholding,media attention and stock price crash risk and puts forward research hypotheses combined with relevant theories.Collect samples of A-share listed companies from 2009 to 2020 through CNRDS database for empirical research.The main conclusions of this paper are as follows:(1)foreign ownership can directly reduce the stock price crash risk;and it can indirectly affect corporate governance,so as to reduce the stock price crash risk.(2)Media attention plays an important regulatory effect.The higher the media attention,the more significant the inhibitory effect of foreign investors on the stock price crash risk.(3)The state-owned nature hinders the role of foreign investors in restraining the stock price crash risk,and the role of foreign investors in reducing the stock price crash risk is more significant in non-state-owned enterprises;in regions with good institutional environment,the role of foreign shareholders is weaker;There are significant industry differences in the relationship between foreign ownership and stock price crash risk.After controlling endogeneity and robustness test,the basic conclusion of this paper remains unchanged.Based on the above empirical conclusions,this paper puts forward the following suggestions.First,the government needs to appropriately introduce foreign investors and use their good awareness of rights protection and business mode to drive the development of China’s market.Secondly,enterprises need to be encouraged to enhance their internal control.Third,we need to take advantage of the supervisory role of the media and formulate relevant norms and rules of the media industry.