The role of the media in corporate governance: Do the media influence managers' capital allocation decisions?

Liu, Baixiao; McConnell, John J.

doi:10.1016/j.jfineco.2013.06.003

Cited by 403 publications

(218 citation statements)

References 26 publications

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“…Miller(2006) reports that media attention is helpful to reveal firms' irregularities and Dyck et al(2008) suggest that media coverage can increase the probability of the rectification of firms' violation based on an empirical study of Russia in 1999-2002. Moreover, Bushee et al(2010) find that related media coverage can decrease information asymmetry, while Liu and McConnell(2013) report their finds that he media can play a role in aligning managers' and shareholders' interests by forcing the management to abandon value-reducing acquisition.…”

Section: Literature Reviewmentioning

confidence: 99%

Does Political Connection Tamper with the Corporate Governance Effect of Media Attention

Lu¹,

Xue-lan²

2016

Proceedings of 2016 5th International Conference on Social Science, Education and Humanities Research

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Abstract.It is an undisputable fact that political connection influences the internal corporate governance in transitional economies However, on whether and how political connection affects the external stakeholders' governance, in-depth discussion is still needed. Taking private listed companies in China as examples, this paper investigates the effect of political connection on the corporate governance role of media from the perspective of earnings management and finds that earnings management is impacted by media attention through reputation mechanism but not financial penalties, while political connection weakens the governance effect. In light of the findings, market mechanism should be perfected, the independence of media should be guaranteed, and the government's function should be continually transformed to give full play of media governance.

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Section: Literature Reviewmentioning

confidence: 99%

Does Political Connection Tamper with the Corporate Governance Effect of Media Attention

Lu¹,

Xue-lan²

2016

Proceedings of 2016 5th International Conference on Social Science, Education and Humanities Research

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“…To ensure our findings are not confounded by the problem, we consider statistically significant CAR . Following Liu and McConnell (), we consider cut‐offs of more than 2% and less than −2% CAR to be positive and negative outcomes, respectively. Untabulated results indicate that our findings are robust to control for the errors‐in‐variable problem (see Table A7 of the Online Appendix).…”

Section: Discussion and Robustness Checksmentioning

confidence: 99%

Observational Learning from Acquisition Outcomes of Innovation Leaders

Chen¹,

Huang²,

Lin

2016

Financial Management

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We examine how learning from observing the acquisition outcomes of innovation leaders affects the acquisition decisions and performance of followers in an industry. Followers tend to increase the probability of acquisition and the size of an acquisition when innovation leader acquisitions produce more favorable outcomes, and reduce both when innovation leader acquisitions suffer more unfavorable outcomes. Industry competition, environmental uncertainty, prior acquisition experience, geographic proximity, and managerial incentives are important mechanisms affecting observational learning in acquisitions. Follower acquisitions perform better when innovation leaders’ acquisition outcomes convey more favorable signals, and more poorly when they convey more unfavorable signals.

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“…7 Third, our paper is related to the literature on the role of media in mergers and acquisitions more generally. Liu and McConnell (2013) show that managers, who have reputational capital at risk, can be swayed by media attention to abandon value-reducing acquisition attempts. Another channel through which the media can influence merger outcomes is through costly signaling, with the media transmitting fundamental information on whether the merger creates or destroys value (Buehlmaier (2013)).…”

Section: Related Literaturementioning

confidence: 99%