The Influence Of Negative Media Reports On The Correction Of Internal Control Defects And Its Mechanism

In November 2018,the ministry of finance and the China securities regulatory commission conducted a systematic analysis on the internal control reports of 2017 publicly disclosed by 3,485 listed companies in Shanghai and Shenzhen stock exchanges,and released analysis report.The report pointed out that some listed companies still have internal control defects disclosed rectification is not in place,to some extent reflects that internal control construction in some listed companies has not been due attention;Next,the ministry of finance,together with the China securities regulatory commission and other regulatory departments,will continue to pay attention to the implementation of enterprise internal control standard system in listed companies,and urge and guide listed companies to continuously strengthen the construction of internal control.This essay aims to study how external governance mechanism to promote the correction of internal control defects in enterprises and provide reasonable suggestions for strengthening the construction of internal control.This essay takes the listed companies with internal control defects in 2012 as the research object and dynamically tests the influence of negative media reports on the internal control defects and its mechanism.Research findings:(1)The negative media reports of the previous period are significantly negatively correlated with the internal control defects of the current period,indicating that the more negative media reports of listed companies,the smaller the degree of internal control defects.In addition,the companies with internal control defects in 2012 tracked by this essay showed a decrease in internal control defects in the later period.It shows that negative media reports can promote the correction of internal control defects of listed companies,and the media as an extra-legal governance mechanism plays an important positive role in the correction of internal control defects of listed companies in China.Moreover,the governance effect of the media is only effective for a period of time,and negative media reports of more than two years cannot play a role in promoting the correction of internal control defects.(2)Negative media reports can cause administrative intervention,which promotes the correction of internal control defects of listed companies.Negative media reports cannot directly affect the internal control defects of listed companies,but can only be affected by administrative intervention and this essay verify that administrative intervention plays a full intermediary role in the negative media reports' influence on the correction of internal control defects.(3)The corporate governance structure can regulate the corporate governance role of negative media reports.Specifically,the higher the proportion of independent directors is,the more negative media reports can promote the correction of internal control defects.Compared with non-state-owned listed companies,negative media reports in state-owned listed companies can better promote the correction of internal control defects.The conclusion of this essay has important implications for government departments and the company's management:first of all,the media as a governance mechanism outside the law to our country listed company internal control defect correction plays an important positive role,we should give full play to the role of the media and public opinion,and journalists' legitimate right to interviews and reports shall be safeguarded in accordance with law so that can promote the healthy development of China's media industry;At the same time,the government should make full use of the role of the media in mining information,timely supervise and check the violations of listed companies,and take timely measures to promote the healthy development of listed companies in the capital market before the problems become serious.Secondly,the corporate governance structure can strengthen the role of negative media reports on corporate governance,from this point of view,enterprises should be reasonable adjustment and allocation of internal resources,to achieve timely repair of internal control defects.To be specific,corporate can consider increasing the proportion of independent directors,giving full play to the role of independent directors,and encouraging them to make suggestions for the rectification of internal control defects.In addition,in the context of China's implementation of mixed ownership reform,when state-owned enterprises introduce non-state-owned enterprises,they should consider that the key resources of internal control should not be replaced.The innovation of this essay lies in that:Firstly,most of the existing studies are static studies on the relationship between media attention and company characteristics.Different from previous studies,this essay uses balance panel data to dynamically investigate the impact of negative media reports on the follow-up rectification of internal control defects of listed companies by taking listed companies with internal control defects in 2012 as samples.In addition,from the perspective of corporate governance mechanism,the research angle of this essay is different from previous studies.Previous studies mainly investigated the factors affecting the correction of internal control defects from the perspective of corporate internal governance.This essay,from the perspective of negative media reports,expanded the external governance factors affecting the correction of internal control defects.Finally,this essay uses crawler technology to collect data of negative media reports.Compared with the previous manual collection of selected words,this method has lower cost and higher accuracy.