Research On The Influence Of IPO Pre-Disclosure System On The Paid Silence Of The Media

The role of media in corporate governance has become a hot research subject nowadays. On the basis of the literature at home and abroad can we come up with the theory of media governance and media bias. The media governance theory emphasizes that the media is just like a mirror of our society. Ultimately, the reports, positive or negative, play a positive role in improving the corporate governance through some mechanisms. However, the media bias theory emphasizes that in the environment of market chaos and profit-driven we just focus on our self- interest, and the reports mainly lead to a negative way, which pursues the maximum value of ourselves, deviates from the objective facts, exaggerates some points of view, so as to achieve public opinion guidance functions and a sensation. Under the premise of media bias theory, media alienation pursues self-interest, deviates the objective stance and leads to waste resources.In the revised version of "Securities Act" in 2005, for the first time that came up with a new pre-IPO company disclosure system which was formally implemented in 2006. This system was designed to ask the listed company to publish some relevant information such as prospectus under the supervision of the public and the media. However, in the environment of media alienation, it caused a phenomenon, which leads to the companies give money to the media to let them stop reporting their bad news before their formal IPO. The exposure of 21CBH extortion case and the grand blast which was reported to pay 6.3198 million yuan to the media in 2012 gradually bring the problem of pre-IPO paid silence before us, in the meantime, catch the attention of CSRC and the public. In this article, we want to explore whether the pre-IPO disclosure system makes an influence on the paid media silence through empirical study, and what effect it brings about. So we choose the IPO data from 2000 to 2014 as samples, and select the information from 1553 listed companies. Through our classification, calculation, statistics and comparison, we hope to discuss the influence on the pre-IPO paid silence which is caused by the the pre-discourse system that promulgated by CSRC in 2006.In this article, through the literature at home and abroad, the leading case (grand blasting) and some well-known cases, we find several factors, which are the characters of the company’s actual controllers, the scale of the companies, the degree of marketization, and managerial ownership, to do further research and come to the following conclusions:(1) With the implementation of the 2006 pre-IPO disclosure system, the likelihood of pre-IPO media paid silence will increase. Then categorizing all the samples, we can find that in different systems of ownership, the private enterprises are more likely to do the media paid silence than the state-owned enterprises and in different scales of the companies, the small firms are more likely to do the media paid silence than the large enterprises. However, in different developmental areas, with the implementation of the pre-IPO disclosure system, the paper does not arrive at a similar conclusion that the underdeveloped area is more likely to do the media paid silence. The main reason is that in the developed areas, the competition is fiercer and there are more listed companies which distract the attention of government and give these companies more freedom. So there is a "nobody’business" phenomenon, which increases the possibility of the media paid silence before the IPO. (2) The more proportion of shares that senior managers have, the more possibility of pre-IPO media paid silence happens.This article from the following aspects of the existing literature to make a useful contribution:In theory, it studies the pre-IPO disclosure in the environment of media alienation to discuss the influence on the media paid silence, which reflects the negative effects of media on the IPO market. By contrast, the studies nowadays overwhelmingly emphasize on the positive effect that the media have. This article provides quantitative and qualitative information in studying media in corporate governance. In practice, results of this study have inspirations and significance in perfecting the pre-IPO disclosure system and improving the efficiency of IPO market at present stage. This article shows that strengthen and advance the disclosure of information is a key link to improve the efficiency of the IPO market, but if there is no other fundamental assistant mechanism, a good intention may lead to bad consequences. So this article from the four views of CSRC, market, IPO company issuers and public media to let us realize that only adhere to the rule of law, the principle and standard of the market, address both the symptoms and root causes, use comprehensive strategies and protect the legitimate rights and interests of investors, especially the medium and small investors, can maximize the overall effectiveness of the system and put an end to opportunistic behavior.