Mass Media In Corporate Governance

Mass media has become an important ingredient in people’s lives under thecircumstances of revolutionary information technology and the wide spread of internetusage. The fast development of mass media in recent years has drawn much attention in theacademic field in our country, and much emphasis has been put in the role it plays incorporate governance. The main difference between the functions of Chinese and westernmedia is derived from the fact that the active participation of Chinese government leads toa completely different competition environment and thus to biased and dependent mediacoverage. Taking all of the above into consideration, this article tried to discuss the highlypractical role of Chinese mass media in corporate governance in China’s specific politicalenvironment.Combining case and empirical study methods, this article aimed to examine the roleof mass media in corporate governance from the perspective of dual agency costs: in casestudy, the article introduced both the positive and the negative roles of mass media; inempirical study, the article made regressions of the panel data from2008to2012in groupsof A share whole sample, state-owned, private-owned, political private-owned andnon-political private-owned companies individually. The purpose was to find how propertyrights (state-owned and private-owned) and political connection (private-owned withpolitical connection and private-owned without political connection) affected Chinesemass media to improve corporate governance and thus to make recommendationsaccordingly. The results revealed that, in the whole sample group, mass media could notsignificantly decrease dual agency costs of listed companies, but functioned much better inthe private-owned sample group. Mass media could also better alleviate Agency Costs I ofnon-political group and Agency Costs II of political group. Moreover, mass media as awhole was better at decreasing Agency Costs I. This article proved the fact that both“property rights” and “political connection” of companies can affect mass media inimproving corporate governance of listed companies significantly. This conclusion canprovide evidence for future researchers in this area.