Research On The Impact Of Media Reports On “High Cash And High Debt”

Corporate “high cash and high debt” means cash reserves and short term leverages simultaneously overhang.Before 2017,the combination of high cash and high debt was merely a manifestation of low capital utility.However,this financial phenomenon has caused the attention of the capital market with more and more companies,like Kangde Xin,received inquiry letters because of “high cash and high debt”.Therefore,it is necessary to analyze this peculiar financial phenomenon of “high cash and high debt”.Media governance as well as corporate cash holdings and leverage ratio are hot issues in academic research.However,there are few literatures to study the phenomenon of “high cash and high debt” in companies,let alone the relationship between media governance effect and “high cash and high debt”.Considering the positive role of media in corporate governance,and the imperfect legal system in our country,this paper introduces the media reports,the external governance mechanism,to explore whether the media attention can effectively restrain “high cash and high debt”.The research results have reference value for market investors and listed companies.This paper mainly investigates the following questions: First,whether the phenomenon of “high cash and high debt” is less with more media reports? Second,will the nature of media coverage affect the role of the media?Specifically,based on the emotion and source of media reports,this paper divides media reports into negative reports and non-negative reports,authoritative media and nonauthoritative media,and tests them in groups.Thirdly,this paper also differentiates enterprise ownership,the coverage degree of analysts and the quality of regional governments,and explores whether there are differences in the impact of media reports on the “high cash and high debt” of companies.To solve the above problems,this paper collected more than 400 online media reports and more than 300 newspaper publication of A-share non-financial listed companies.We find that the media reports can effectively curb corporate “high cash and high debt”.This result is still valid after the adoption of different measures of “high cash and high debt” and the adoption of instrumental variables to control endogeneity,which proves the robustness of the result in this paper.Furthermore,this paper finds that negative reports and authoritative reports are more likely to curb corporate “high cash and high debt”.We also find that for private companies,companies with higher coverage by analysts and companies with higher quality of government,the supervision effect of media reports on the “high cash and high debt” is stronger.This paper presents corresponding countermeasures and suggestions based on the above results: First,improve the policy support and legal guarantee for the media industry,and create a healthy and benign media ecological environment;Second,increase the "invisible hand" of the market and reduce the "visible hand" of the government.Third,improve the analysis ability of analysts,and guide analysts to play an active role in information interpretation;Fourth,strengthen external supervision and self-discipline of the banking industry.