Media Coverage, Investor Protection and Stock Price Crash Risk

Kun Su

doi:doi:10.11648/j.ijefm.20231104.16

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Media Coverage, Investor Protection and Stock Price Crash Risk

Kun Su

Published in International Journal of Economics, Finance and Management Sciences (Volume 11, Issue 4)

Received: 28 June 2023 Accepted: 18 August 2023 Published: 22 August 2023

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Abstract

Stock price crash risk is very serious in China's capital market, which seriously harms the interests of investors and the resource allocation efficiency of the capital market. However, there is limited evidence on the determinants of stock price crash risk in China, especially from the perspective of informal institutions. Using a corporate level dataset of Chinese listed companies, this paper aims to study the effect of media coverage on stock price crash risk and the moderate effect of investor protection on this association. Using the correlation and multiple regression analysis methods, the empirical results show that: media coverage can help to reduce the information asymmetry and agency problems, and thus reduce the motivation of manager’s “bad news” concealing behavior, which in turn reduces the stock price crash risk in Chinese capital market. Investor protection negatively moderates this relationship between media coverage and stock price crash risk. The effect of media coverage on stock price crash risk is more pronounced when investor protection environment is poor. This article enriches and expands the research on the affecting factors of stock price crash risk. It has important implications for us to recognize the value of media coverage and reduce stock price crash risk.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 11, Issue 4)
DOI	10.11648/j.ijefm.20231104.16
Page(s)	205-211
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Stock Price Crash Risk, Media Coverage, Investor Protection

References

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Kun Su. (2023). Media Coverage, Investor Protection and Stock Price Crash Risk. International Journal of Economics, Finance and Management Sciences, 11(4), 205-211. https://doi.org/10.11648/j.ijefm.20231104.16

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ACS Style

Kun Su. Media Coverage, Investor Protection and Stock Price Crash Risk. Int. J. Econ. Finance Manag. Sci. 2023, 11(4), 205-211. doi: 10.11648/j.ijefm.20231104.16

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AMA Style

Kun Su. Media Coverage, Investor Protection and Stock Price Crash Risk. Int J Econ Finance Manag Sci. 2023;11(4):205-211. doi: 10.11648/j.ijefm.20231104.16

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@article{10.11648/j.ijefm.20231104.16,
  author = {Kun Su},
  title = {Media Coverage, Investor Protection and Stock Price Crash Risk},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {11},
  number = {4},
  pages = {205-211},
  doi = {10.11648/j.ijefm.20231104.16},
  url = {https://doi.org/10.11648/j.ijefm.20231104.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20231104.16},
  abstract = {Stock price crash risk is very serious in China's capital market, which seriously harms the interests of investors and the resource allocation efficiency of the capital market. However, there is limited evidence on the determinants of stock price crash risk in China, especially from the perspective of informal institutions. Using a corporate level dataset of Chinese listed companies, this paper aims to study the effect of media coverage on stock price crash risk and the moderate effect of investor protection on this association. Using the correlation and multiple regression analysis methods, the empirical results show that: media coverage can help to reduce the information asymmetry and agency problems, and thus reduce the motivation of manager’s “bad news” concealing behavior, which in turn reduces the stock price crash risk in Chinese capital market. Investor protection negatively moderates this relationship between media coverage and stock price crash risk. The effect of media coverage on stock price crash risk is more pronounced when investor protection environment is poor. This article enriches and expands the research on the affecting factors of stock price crash risk. It has important implications for us to recognize the value of media coverage and reduce stock price crash risk.},
 year = {2023}
}

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TY  - JOUR
T1  - Media Coverage, Investor Protection and Stock Price Crash Risk
AU  - Kun Su
Y1  - 2023/08/22
PY  - 2023
N1  - https://doi.org/10.11648/j.ijefm.20231104.16
DO  - 10.11648/j.ijefm.20231104.16
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 205
EP  - 211
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20231104.16
AB  - Stock price crash risk is very serious in China's capital market, which seriously harms the interests of investors and the resource allocation efficiency of the capital market. However, there is limited evidence on the determinants of stock price crash risk in China, especially from the perspective of informal institutions. Using a corporate level dataset of Chinese listed companies, this paper aims to study the effect of media coverage on stock price crash risk and the moderate effect of investor protection on this association. Using the correlation and multiple regression analysis methods, the empirical results show that: media coverage can help to reduce the information asymmetry and agency problems, and thus reduce the motivation of manager’s “bad news” concealing behavior, which in turn reduces the stock price crash risk in Chinese capital market. Investor protection negatively moderates this relationship between media coverage and stock price crash risk. The effect of media coverage on stock price crash risk is more pronounced when investor protection environment is poor. This article enriches and expands the research on the affecting factors of stock price crash risk. It has important implications for us to recognize the value of media coverage and reduce stock price crash risk.
VL  - 11
IS  - 4
ER  -

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Author Information

Kun Su

School of Management, Northwestern Polytechnical University, Xi’an, China

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Plain Text BibTeX RIS

APA Style

Kun Su. (2023). Media Coverage, Investor Protection and Stock Price Crash Risk. International Journal of Economics, Finance and Management Sciences, 11(4), 205-211. https://doi.org/10.11648/j.ijefm.20231104.16

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ACS Style

Kun Su. Media Coverage, Investor Protection and Stock Price Crash Risk. Int. J. Econ. Finance Manag. Sci. 2023, 11(4), 205-211. doi: 10.11648/j.ijefm.20231104.16

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AMA Style

Kun Su. Media Coverage, Investor Protection and Stock Price Crash Risk. Int J Econ Finance Manag Sci. 2023;11(4):205-211. doi: 10.11648/j.ijefm.20231104.16

Copy | Download

@article{10.11648/j.ijefm.20231104.16,
  author = {Kun Su},
  title = {Media Coverage, Investor Protection and Stock Price Crash Risk},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {11},
  number = {4},
  pages = {205-211},
  doi = {10.11648/j.ijefm.20231104.16},
  url = {https://doi.org/10.11648/j.ijefm.20231104.16},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20231104.16},
  abstract = {Stock price crash risk is very serious in China's capital market, which seriously harms the interests of investors and the resource allocation efficiency of the capital market. However, there is limited evidence on the determinants of stock price crash risk in China, especially from the perspective of informal institutions. Using a corporate level dataset of Chinese listed companies, this paper aims to study the effect of media coverage on stock price crash risk and the moderate effect of investor protection on this association. Using the correlation and multiple regression analysis methods, the empirical results show that: media coverage can help to reduce the information asymmetry and agency problems, and thus reduce the motivation of manager’s “bad news” concealing behavior, which in turn reduces the stock price crash risk in Chinese capital market. Investor protection negatively moderates this relationship between media coverage and stock price crash risk. The effect of media coverage on stock price crash risk is more pronounced when investor protection environment is poor. This article enriches and expands the research on the affecting factors of stock price crash risk. It has important implications for us to recognize the value of media coverage and reduce stock price crash risk.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - Media Coverage, Investor Protection and Stock Price Crash Risk
AU  - Kun Su
Y1  - 2023/08/22
PY  - 2023
N1  - https://doi.org/10.11648/j.ijefm.20231104.16
DO  - 10.11648/j.ijefm.20231104.16
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 205
EP  - 211
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20231104.16
AB  - Stock price crash risk is very serious in China's capital market, which seriously harms the interests of investors and the resource allocation efficiency of the capital market. However, there is limited evidence on the determinants of stock price crash risk in China, especially from the perspective of informal institutions. Using a corporate level dataset of Chinese listed companies, this paper aims to study the effect of media coverage on stock price crash risk and the moderate effect of investor protection on this association. Using the correlation and multiple regression analysis methods, the empirical results show that: media coverage can help to reduce the information asymmetry and agency problems, and thus reduce the motivation of manager’s “bad news” concealing behavior, which in turn reduces the stock price crash risk in Chinese capital market. Investor protection negatively moderates this relationship between media coverage and stock price crash risk. The effect of media coverage on stock price crash risk is more pronounced when investor protection environment is poor. This article enriches and expands the research on the affecting factors of stock price crash risk. It has important implications for us to recognize the value of media coverage and reduce stock price crash risk.
VL  - 11
IS  - 4
ER  -

Copy | Download