Negative Slant Of The Media Coverage And The Outcome Of The Mergers And Acquisitions

Media not only act as an information intermediary for investors in the capital markets for information transfer, information processing, and discovering new information, but also play the role of external watchdog for corporate governance. Mergers and acquisitions(M&A) is both an option for business development, but is also a way to solve the corporate governance issues. Firms’ post-merger announcement usually have continued and significant impact on the stock markets. In the acquisition process, the media which play the role of “Communication Bridge” in information dissemination between companies and investors are also the main source of information for the investors on the capital market. The media reports exert an influence on investors’ decision-making, resulting in volatility of the M&A companies’ stock prices, and in turn have an impact on the M&A results. However, China as a transitional economy lacks a sound legal system and a mature market of managers, do media bias have an impact on M&A?In order to answer this question, this thesis uses 797 M&A cases between 2000 and 2012 as a sampling frame, on the basis of using text analysis tools to determine the propensity of media reports, using logit regression to test the impact of the media reporting bias on M&A. The study found that negative news reporting on a M&A has a negative influence on the final results. Such an influence is greater among private enterprises than state-owned companies, and even greater impact is found to occur after the split-share reform. In order to slove the problem of Multicollinearity due to the introduction of cross-multiplication term result, in this paper the key variables to the equalization process. Robustness tests showed multicollinearity did not change the symbol direction and statistical significance of key variables, show that this conclusion is robust.Based on the study of the role of the media on corporate governance, this study has further explored the impact of media bias, has broadened the research perspectives on media and corporate governance, and offers future research opportunities on the studies that combine the media and corporate governance. Moreover, against the institutional background of the transitional economy and emerging markets, this study has also explored the impact of media reporting bias on M&A. By researching about M&A, this research confirms the media’s role as an information intermediary and in corporate governance, as well as explores the effective ways the transparency of information disclosure can be increased, and how corporate governance investor protection mechanism could be optimised during the announcement of M&A in public listed companies.