Media coverage, social trust and corporate financing efficiency

Abstract

The increasing influence of media coverage on corporate financial outcomes has become a critical area of study; however, the intricate relationships among media reporting, social trust, and corporate financing efficiency remain underexplored. This study examines how different types of media coverage impact corporate financing efficiency, while considering the moderating role of social trust. We employ two-way fixed-effects and moderating effects models to analyze these relationships using data from A-share listed companies in China from 2004 to 2022. The findings reveal that positive and neutral media coverage significantly enhances corporate financing efficiency, with positive coverage exhibiting a stronger effect. In contrast, negative media coverage substantially diminishes financing efficiency. Notably, social trust amplifies the impact of all types of media coverage, intensifying both positive and negative effects. We also find that state-owned enterprises are more sensitive to media coverage than non-state-owned counterparts. These results contribute to the understanding of information dissemination in financial markets and highlight the importance of social context in shaping corporate financial outcomes. Our study offers valuable insights for developing corporate communication strategies and targeted policymaking, emphasizing the need for proactive media management and consideration of social trust in financial environments. Future research could explore these dynamics in diverse cultural and economic settings to further elucidate the complex interplay between media, social trust, and corporate finance.