Can Media Coverage Improve Corporate Governance?Evidence from Fraud by Listed Firms in China
ZHOU Kaiguo, YING Qianwei, ZHONG Chang
Lingnan College/ Collaborative Innovation Center for the Cooperation and Development of Hong Kong, Macao and Mainland China, Sun Yat-sen University; Business School, Sichuan University
Abstract:
This paper directly investigates the impact of media coverage on corporate governance as well as the mechanism, from the perspective of corporate fraud frequency, and also analyzes the different governance roles of media coverage on firms with different fraud frequency. The empirical results show that the media coverage does mitigate the frequency of corporate fraud, especially for the firms with more frequent frauds. This paper further discovers that the governance role of media coverage increased year by year. Finally, we find an evidence supporting the argument that the positive role of media coverage in corporate governance mainly works through the government involvement mechanism rather than the reputation mechanism.
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