Media censorship and stock price: Evidence from the foreign share discount in China

Abstract

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Investor reactions to local and overseas news: Evidence from A‐ and H‐shares in China

“…Meanwhile, having less association with domestic business, foreign media outlets are relatively independent and objective and thereby play a more critical role in corporate governance (Dyck et al, 2008). Additionally, as pointed out by Ding et al (2018), the ratio of positive to negative news is substantially higher for Chinese media than for other regions' media due to the strict media censorship.…”

“…Moreover, by showing that the intensity of investor reactions to news reports varies with media location, we propose a new explanation for why two share classes, listed in different markets but identical with respect to company fundamentals and shareholder rights, differ in capital costs and return rates. Aside from prior theories of market microstructure (Chan, Menkveld, & Yang, 2008), investment vehicle limitations (Sun & Tong, 2000), information exploitation (Li, Brockman, & Zurbruegg, 2015), analyst recommendations (Jia et al, 2017), and press censorship (Ding, Hou, Liu, & Zhang, 2018), the price difference may be attributed to investors' local media preference.…”

Media and Economic Growth: Country Groups Difference via Panel Data

“…There were found significant relation, which shows that more freedom of the press and lower level of stock price synchronicity, enhancing information conditions of stock markets [26]. Another study in the field of stockiest prices suggested that free press enables free market disclosure with a more rapid market reaction [27]- [28], while media censorship affects foreign share discounts and international capital flows [29]. On the entity level, countries with freer media have more chances that corporate social responsibility activity enhances the value of local firms [30] as well as is considered a business environment and obstacles less significant [31].…”