Media Reporting, Company IPO And Investor Protection

Investor protection has always been a hot topic of capital markets and corporate governance research fields. A large number of theoretical and empirical studies have shown that the better investor protection of a country or region, the lower the cost of equity capital, the higher the efficiency of capital markets, the more developed the capital markets. However, since the imperfect legal system, and other factors, under the Transition Economy Background, Chinese IPO market has become a center for various interest groups Game, full of chaos, "Three high problem" is outstanding (high stock issue price, high price-earnings ratio and high IPO underpricing), and investor protection (especially small investors) is seriously inadequate. Although, it can be solved fundamentally through perfecting laws and improving the level of Law enforcement, however, due to differences in history, culture, language and religion, and social networks and political norms, so as to raise the level of the rule of law is a long process not on a chip and thus the scholars turn to study of outside legal system. Among them, with the rapid development of modern communication technology, the rise of power of the media has become an important social phenomenon, media monitoring is considered to be an effective alternative to the judicial system of the important investor protection arrangements, and gradually attracts more and more academic attention. Therefore, the study of the role of media in protecting investors in the IPO process has important theoretical and practical significance, for the construction and development of China's capital markets.Using the data from the companies listed at the small board of Shenzhen from June 2009 to December 2012, By examining the relationship between media reporting and the company's IPO approval, IPO stock offering price, IPO underpricing, IPO financing efficiency and stock price movements after IPO, the paper studies the media's role of investor protection in the company's IPO process from the two dimensions of media coverage and media monitoring comprehensively.First, based on the Chinese Transition Economy Background the paper presents research questions, reviews the theory of the media, company's IPO and investor protection, lists research methods and technology roadmap, and notes the innovation of the paper. Second, combining the institutional background of IPO Inquiry System, with the number of media reports as a proxy variable of media reporting, and number of negative media reports or the proportion to the number of negative media reports and the number of total reports as the proxy variable for media monitoring, the paper makes a comprehensive study of the media reporting and the company's IPO approval, IPO stock offering price, IPO underpricing, IPO financing efficiency and stock price movements after IPO, studes the media's role of investor protection in the company IPO process, confirmes media reporting has information content, and reveals the investor protection mechanisms played by the media. Further, the paper also studies the impact of media reporting on the company's IPO financing efficiency. Finally, the conclusion summarizes the main contents and innovations of this article, gives policy recommendations, and notes that insufficient research and future research directions.In this paper, the main conclusions are summarized as follows:(1) media monitoring can significantly improve the probability that the IPO company is not approved by the Commission, has a significant negative impact on the company's IPO Initial Public Offering and IPO underpricing, and media monitoring also can significantly improve the IPO financing efficiency, media reports have informative content; Media's role of investor protection is achieved by triggering an external monitoring mechanism (incurring greater scrutiny of the SFC), IPO stock issue pricing mechanism and punishment mechanism of capital market; Further studies shows that media's role of investor protection can be influence by the level of legal protection and the degree of development of financial markets of the location of the company.