A Literature Review of Corporate Strategic Media Disclosure

Abstract

Many researches show that media coverage has a significant impact on stock price and its return, and even leads to long-term deviation of the company’s stock price from its fundamental value. Sometimes, when stale news is reprocessed and diffused again by mass media, it may also trigger violent fluctuation for stock price. Since media coverage has such an important influence on capital market, company management is likely to disclose strategically by media to seek a favorable impact on their company’s capital market performance, and the motivation of managing media coverage is particularly strong during major events. Relevant literature indicates that the internalization or outsourcing of media disclosure management mainly depends on company management’s media communication capability and its experience. The significant impact on stock market by news media, personal interests of managers and externalities of media disclosure from their peers will further stimulate the corporate motivation of media disclosure management. Generally, company managers manage media coverage by influencing the factors of media bias such as disclosure timing, news positioning, media type, media exposure and report tone, especially during important events, such as corporate crisis, IPO, merger and acquisition, insider trading and second equity offerings, so as to maximize the company’s or managers’ self-interests. Finally, under the analysis of limitations for the existing research, we further discuss about its future research from methodology, sample data and institutional environment. In this paper, the possible contributions lie in: （1） From the perspective of the definition, patterns, motivations, ingredients and the performance of media disclosure management, we collect and review a large number of literature in recent years about strategic media disclosure by corporate management from the field of accounting and finance. This not only provides us some enlightenments to further research the mode and mechanism for corporate media of information disclosure management, but also enriches the existing documents on corporate information disclosure and its market effect. In the meantime, this research may help people better understand the important role of corporate managers in the process of media disclosure and their endogenous impact on stock price, and help investors appreciate and grasp the nature and law of stock price fluctuation. （2）In addition, it also provides new support and references for corporate media （information） disclosure management in China, and makes contributions for improving regulations of information disclosure as well as investor education.