The Influence Of Media Governance On Majority Shareholder’s Embezzlement

Due to the highly concentrated ownership in China’s listed corporations and the weak law protection to minority shareholders, the majority shareholder always use their control rights to obtain private benefits, therefore the conflict of interest between the majority shareholder and minority shareholders become the principal agent problem. Recently both domestic and foreign scholars explore the influence factors of majority shareholder’s embezzlement mainly from the perspective of internal governance mechanism, external audit mechanism, supervision mechanism and legal mechanism. Few scholars can jump out of the traditional corporate governance analytical framework and analysis from the perspective of media governance. Under the economy transition condition, whether the media, as an external corporate governance mechanism, can constrain the behavior of the majority shareholders effectively, and play a role in inhibiting their embezzlement? Will the relationship between media governance and majority shareholder’s embezzlement be influenced by government intervene?In order to solve those problems above, based on the theoretical analysis of the media coverage and majority shareholder’s embezzlement, we use large sample analysis to empirically test the role of media in corporate governance. Using the2010and2011data of nonfinancial listed companies on Shanghai and Shenzhen Stock Exchange, after screening a series of samples, finally we obtain2218listed companies as the research sample to conduct empirical analysis. After controlling the internal governance factors and company characteristic variables that may affect majority shareholder’s embezzlement, using the least square method, we test the relationship between media attention and majority shareholder’s embezzlement, government intervention and majority shareholder’s embezzlement. Then we investigate the effect of government intervention on the degree of media governance. In order to tackle the problem of endogeneity, we use the number of media coverage issued last year as a proxy for the degree of media coverage.Empirical results show that, government intervention intensifies the degree of majority shareholder’s embezzlement; although media attention has good governance effect on the majority shareholder’s embezzlement, the degree of media governance can be affected by government intervention. Specifically:(1) the higher the degree of media attention, the lower the extent of majority shareholder’s embezzlement;(2) the more local government intervention, the more serious the problem of majority shareholder’s embezzlement;(3)the degree of government intervention will not only influence majority shareholder’s embezzlement behavior, but also affect the governance role that media played in restraining majority shareholder’s embezzlement.By examining the relationship between media governance and majority shareholder’s embezzlement, this paper enriches the study of media governance and the influence factors of majority shareholder’s embezzlement. At the same time, combining with the empirical results, we put forward some opinions, and hope to be effective in enhancing the media governance role and solving the problem of majority shareholder’s embezzlement.