Does media coverage deter firms from withholding bad news? Evidence from stock price crash risk

An, Zhe; Chen, Chen; Naiker, Vic; Wang, Jun

doi:10.1016/j.jcorpfin.2020.101664

Cited by 138 publications

(87 citation statements)

References 60 publications

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“…Moreover, other researchers argue that there is a negative relationship between media coverage and stock price crash risk. In addition, media serves as an audit role to reduce that risk when there is reduced monitoring [13]. In our study, we discover that a firm with strong internal control reduces its stock price crash risk and supplements these studies from another perspective.…”

Section: Introductionsupporting

confidence: 64%

Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China

Siru¹,

Huang²,

Wang³

2021

Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

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Under a unique setting in China, the success of internal control is dependent upon whether the informational and disciplinary role it serves effectively manages risks. Using the data from the China Stock Market & Accounting Research database and Dibo databases, the relationship between internal control and stock price crash risk of the firms is investigated. Our empirical results from the regression model show that there is a negative correlation between the price crash risk and the internal control. After two robustness checks, including alternative measures and multi-fixed effects model analysis, the same results are obtained as before. Furthermore, our heterogeneity analysis shows that the effect of internal control is much more significant on small-cap firms and firms with low institutional ownership. Collectively, our findings suggest that the importance of internal control on firm governance helps reduce stock price crash risk.

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Section: Introductionsupporting

confidence: 64%

Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China

Siru¹,

Huang²,

Wang³

2021

Proceedings of the 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021)

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“…Cohen et al (2017) find that media coverage is more likely to expose opportunistic behaviours of managers and to increase their reputational damage. An et al (2020) find that firms with high media coverage are less likely to experience future stock price crashes. Bajo and Raimondo (2017) find that favourable media coverage is associated with IPO under-pricing positively, because of the increased demand for the stock, and this, in turn, maximizes first-day returns.…”

Section: Media Coverage and Financial Report Restatementsmentioning

confidence: 87%

Media coverage and financial restatements: evidence from China

Alkebsee

Habib

2021

ARA

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PurposeDrawing on the premise that the media play a vital corporate governance role, this paper aims to investigate the association between media coverage and financial report restatements.Design/methodology/approachBased on a sample of Chinese listed companies over the period 2011–2015, the authors use ordinary least squares regression as well as a number of additional tests. To mitigate the endogeneity issue, the authors use a two-stage Heckman test and a propensity score matching model.FindingsThe authors document a negative and significant association between media coverage and restatements, suggesting that firms with high media coverage engage less in financial restatements. The authors further explore the moderating effects of internal control quality and state ownership on the association between media coverage and restatements. Regression results reveal that the governance role of the media is more pronounced for state-owned enterprises than for private firms. However, no significant difference in the disciplining effect of media coverage is found for firms with high, versus low, internal control quality.Originality/valueThe role of the media in corporate governance and financial reporting quality has been well documented. In emerging economies, such a role has been overlooked. As a result, the purpose of this study is to fill that void. Furthermore, prior research ignores the impacts of state ownership and the internal control environment on the media's governance role.

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“…A study by An et al. (2020) found that media coverage plays an instrumental role in reducing stock price crash risk.…”

Section: Media Coveragementioning

confidence: 99%

Micro-, meso- and macro-level determinants of stock price crash risk: a systematic survey of literature

Ali¹,

Wilson

Husnain³

2022

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PurposeThis article conducts a thorough review and synthesis of the empirical research on the antecedents of stock price crash risk to ascertain the macro-, meso- and micro-level determinants contributing to stock price crashes.Design/methodology/approach The authors systematically reviewed 85 empirical papers published in ABS-ranked journals to assess the macro-, meso- and micro-level determinants causing stock price crashes.FindingsThe findings indicate that macroeconomic factors such as corporate governance, political and legal factors, socioeconomic indicators and religious beliefs have an effect on firm-level corporate behavior contributing to stock price crash risk. At a meso-level customer concentration, industry-level characteristics, media coverage, structural features of ownership and behavioral factors have a substantial effect on stock price crash risk. Finally, micro-level variables influencing stock market crash risk include CEO qualities and compensation, business policies, earnings management, financial transparency, managerial characteristics and firm-specific variables.Research limitations/implicationsBased on our analysis we identify priority areas for future research.Originality/valueThis is a seminal work using a multilevel framework to categorize the determinants of stock price crashes into micro-, meso- and macro-level factors.

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Does media coverage deter firms from withholding bad news? Evidence from stock price crash risk

Cited by 138 publications

References 60 publications

Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China

Does Internal Control Reduce Firms’ Stock Price Crash Risk? Evidence from China

Media coverage and financial restatements: evidence from China

Micro-, meso- and macro-level determinants of stock price crash risk: a systematic survey of literature

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