Influence Of Negative Media Coverage Of Short-term Market Reaction And Long-term Corporate Performance

With the improvement of technology and our living standard, the media has achieved rapidly development in recent years. It uses newspapers, magazines and television as traditional information sources and the Internet as an emerging communication platform. The investors can acquire valuable instant information from the media so that they can make decisions more quickly and comprehensively. In November 2014, ZhangZiDao, once honoured as the first stock in the aquaculture section, was exposed by the media that eight hundred million scallops vanished suddenly. At that time, many investors withdrew their funds, and the share price went all the way down, which eventually led to net profit losses of 812 million RMB, and seriously affected the performance of the enterprise. This shows that media attention exerts profound influence on corporation performance. Consequently, what specific influence media attention has and how it influences company performance are what this paper focus on.Firstly, this paper defines some related concepts such as the media. Then it reviews and summarizes relevant literature at home and abroad. This paper uses information asymmetry, investor sentiment, stakeholder theory and reputation mechanism as theoretical basis and combines the theoretical and empirical study to put forward the hypothesis and establish the model. It uses STATA12.0 to make event study and SPSS19.0 to do empirical research from two aspects of short term and long term with the data collected from CSMAR and RESSET. At last, some reasonable suggestions are put forward from the perspective of corporation itself, the media and the government. The conclusions according to the research are as follows:first, once the negative news was reported, the short-term abnormal media attention is inversely proportional to the listed company’s share price, the more attention, the lower the price; secondly, after the negative news was reported, the long-term attention could bring recovery to the enterprise performance through corporate governance, the more attention media pays, the more effective corporate governance becomes and the better long-term performance the company achieves.This paper initially selected the "top ten blacklist enterprises" candidates in 2011-2013 as samples, and studied the influence of media attention to corporate performance when negative information was exposed respectively from the aspects of short-term results and long-term performance. The research purposes are to attract the attention of enterprises, strengthen internal management, improve the information disclosure mechanism and establish a good corporate image. In addition, to reduce similar event such as ZhangZiDao as much as possible, the supervision of media and the government still needs to be strengthened.