The Relationship Among Media Reports, Corporate Social Responsibilities Of Listed Companies And Corporate Earnings

With the development and progress of economy, as well as science and technology, the world has witnessed the rapid development of China. In June2012, the Shenzhou-9manned spacecraft carrying three astronauts aboard the space rendezvous and docking with Tiangong-1, which represented the new chapter of China’s space history. On June27, Jiaolong manned submarine successful completed the test and landed for the first time at the depth of7026meters underwater. Meanwhile, we have to recognize that there exists lots of hinder on the way to the developed society, just like the corporate social responsibility (CSR) problems.Since joining the WTO, the Chinese government has always advocated in building a harmonious society, any organization has to create conditions for sustainable development of our country. Meanwhile, the news media has broken the rigid mode of operation. Instead, they integrated the new element-Internet-to create a new channel to broadcast. So mainstream media (including television, network, micro-blogging, printed magazines, newspapers etc) could easily deliver the enterprises’behavior and consequences which go against CSR, Just like the red duck egg event in2006, Sanlu tainted milk powder incident in2008, milk deluxe OMP event in2009, Shuanghui Ham sausage additive incident in2011, the horse meat scandal in2013, KFC chicken crash etc. The ensuing negative reports reveal the fact that China is embraced with a huge challenge in the aspect of CSR.Based on the background, this paper focused on the purpose of solving the problems above, which included why so many companies would like to violate CSR that frequently, whether these behaviors were related to the enterprises’ surplus motivation, what contributions media made for negative events, and whether media played the role of supervising the capital market. In order to solve the problems, this paper intended to find out the relationships among media reports, CSR and corporate earnings.This paper fully considered the dilemma of CSR in China. From the standpoint of capital market, CSR system was incomplete, the cost of accounting information was high and relevant supporting laws were insufficient. From the microcosmic perspective, the enterprises which were lack of CSR consciousness had always treated the rules with fluky minds, therefore to disclose information in the form of just words but not statistics. To some extent these problems had made the barriers for empirical researches. So this paper chose to use case study.Considering the following factors, this paper focused on the pollution case of Zijin Mining Group. Firstly, Zijin Mining Group Co., Ltd was listed in China’s security market on April25,2008. Since then, it established the goal of becoming the gold and nonferrous metal material enterprise with positive reputation throughout the world. Under the aim, Zijin’s financial performance has always been outstanding. In2006and2007, the firm was listed on Forbes list of China’s leading enterprises in consecutive years, firmly became the industry’s leading company. So the public thought highly of it. Secondly, representing the leading enterprise of our country, Zijin had already won the investors’trust. Once failed to comply with CSR rules or caused some serious problems to society or economy, the public reaction would be more intense. Thirdly, in the year of2010, Zijin mining pollution and dam break accidents happened in July and September continuously, lots of fish died in the polluted water, and residents’ daily life as threatened. Since then, an increasing number of journalists came to the site, looking for the cause and some other information. Some of the media provided special reports to the public on the websites. The events had already passed for more than two years. Compared with the newly happened incidents, we could easily search information about it, and hence to discuss the rectification it adopted after being exposed by the media, as well as its changing attitude for CSR. The information would be treated as reliable evidence to the case study.After selecting the model case, this paper arranged five chapters to analyze it. Chapter one focused on the introduction of this paper, mainly including the background, significance and purpose, and clearly showed the overall framework.The second part is literature review, which summarized the previous literatures in three aspects, including the researches of current situations of CSR, the relationship between CSR and capital market, and the correlation between media reports and capital market. This article found that most scholars paid attention to the relationships between CSR and corporate performance or reaction of investors, etc. The most common patterns of measurement were the degree of fulfillment and disclosure. In the aspect of contents, investors were more sensitive to the negative news. Although there were considerable numbers of scandals in capital market in recent decades, the researches among media reports, CSR and corporate earnings were scarce. So this paper chose to discuss the influence mainstream media exerted to the enterprise’s illegal behaviors, and the motives of earning.In chapter three, this paper reviewed the theoretical knowledge which included CSR theory, stakeholder theory, media theory and corporate reputation mechanism. All of these theories would provide theoretical supports to case analyze.Chapter four is the analysis of Zijin mining case, including background of the event, motivation, functions media played for the rectification and the problems embraced by media supervision. According to the analysis, this paper found that the violation of Zijin was caused by many factors.From inner part of enterprise, the first reason was that the management of Zijin lacked the sense of social responsibility. The second one was the operation mode of Zijin. According to cost-benefit principle, the firm had always spared no effort to cut down the costs, including the expenses on CSR. So the behaviors related to CSR would inevitably become the victim of profits.Meanwhile, the external factors would not be ignored. The first one was the mix power of management and local government. When the firm created revenues for the government, it also asked for the government to hide its irregularities. Secondly, supporting policies and supervision systems of our capital market were not synchronized, and there existed spots that the regulators could not stretch. The third one is that the legal system for punishment of violations could not threaten the firms. Most of the firms could even treat the punishment as part of the costs of business. So the deficiency of regulatory mechanism strengthened enterprises’ ambition of violation. Fourthly, the lack of a good atmosphere of CSR seriously hindered the healthy development of social responsibility.Then, this paper summed up the functions media played in the case, so as to highlight the necessity of media supervision in capital market.In order to draw more readers, the mainstream media went to great length to dig for information. After being exposed by the media, the relevant departments came to investigate the case quickly. Meanwhile, the media announced the newly information to the public in time. Under the surveillance of media, the management of Zijin apologized to the public sincerely, cooperated with the investigation. and the firm also announced its latest planning, and promise to rectify. Until today, the media still track the case’s subsequent advances and the attitudes towards the earnings, fully demonstrate the auxiliary of media surveillance in capital markets. So media supervision deserved the attention and recognition of our country, and active participation of media would be the developing trend of market supervision.In spite of this, the media was embraced by so many difficulties, people varied in the sense of CSR and moral awareness, the media was restrained in the scope of influence and supervision, and media supervision lacked of legal protection, etc. In order to achieve and also ensure media’s functions, this paper argued that governments should actively encourage the media to participate in the market.The last part of this paper is the conclusion. This paper will give a summarization from in and outside of the company about the occurrence, reveal and settlement of the case, gave suggestions of relevant policy about CSR and supervision system in the level of listed companies, media and capital market.Unlike previous researches, this paper broke through the limits that most of the researchers might meet. In our capital market, the disclosure of information, especially data, among listed companies was not in conformity with the regulations, so it was hard to collect relevant material about CSR. So this paper turned to case study. Secondly, previous study focused on the relationships between CSR and corporate governance, so this article would go on seeking the relationship between the two factors in the case of Zijin mining pollution events, what was more, this paper would add another factor(media) to find the influence media will bring to the case, whether media played the role of supervision, whether listed companies improved their understanding of CSR after the negative events, whether media supervision should be added into the system of capital market supervision. From this case, we would find the necessity and importance of media supervision.The first deficiency of this article was that it only embodied in the case study. The regulation degree in our capital market was low, there were no uniform standards for the measurement of CSR, so we could not compare any two of the company’s condition, even in the same industry, and the results of empirical study would be interfered by the researchers’ feelings. So, as long as capital market perfects its disclosure and judgment mechanisms, the results of empirical study will be worthy of trust. The second one focused on the judgment standard of the number and characteristics of the reports. The characteristics of reports relied on the writer’s judgment, but riot uniform standards, so as to influence the credibility of the results. The third one was the lack of the relevant literatures in and out of China. The last one was that this paper was limited by the author’s theoretical knowledge and writing level, the analysis was not comprehensive.