Media Disclosure Strategy And Wealth Transfer

In recent years, the domestic listed companies executives reducing holding shares is becoming increasingly serious, which attracts the attention of regulators and the communities. Executives, being the power center of the enterprise, maybe take advantage of its internal control to seek private interests during the reduction process. And this phenomenon is questioned by external investors. The study shows that media reports have become important causes of stock price fluctuation,and have "soft information characteristics. So, executives won't ignore the role that media play in affecting stock price,and they may take the initiative to seek an influence on media reports. Then, during the process of reduction, does the company executives have a strong incentive to implement the media disclosure management in order to meet the needs of the reduction? If there is,what is the main factor that drives the company to carry out the behavior, and what is the specific economic effect? These are the key issues to be discussed in this paper.Based on the data of corporate managers' stock-selling between 2006 and 2014 in China A-stock market, and the coverage from newspaper and internet media, we systematically study the corporate media disclosure management behavior and its market effect. The study examines there exists a obvious tendency of media disclosure management during the reduction of executives, aiming at realizing the goal of their wealth transfer. The main findings are as follows. (1) At the beginning of the stock-selling, the company will start to create media hype, and the media reports reach the maximum at the current stage. After that, they are back to normal again and dropped significantly. (2)During different periods, corporate's media disclosure strategy is not the same.Specifically, the company tend to focus on the media slant at the previous stage of the reduction and put particular emphasis on the number of the media at the current stage. (3)In addition to executive's positions,the scale of reduction and the number of executive that participates in stock-selling have a significant impact on media disclosure strategy.Moreover, we find the lower the competition of the industry, the more evident the company's media management behavior is. (4) Media disclosure strategy can boost the company's share price in short-term,which is conducive to cash holdings of managers, but reverse in long-term. (5) The externality of the media disclosure management behavior will lead to the phenomenon of "free rider" reduction. Our findings make contribution to enriching the existing documents about the insider trading and corporate information disclosure,and have important theoretical and practical significance for improving corporate governance and information disclosure regulation as well as investor education.