Can media exposure improve stock price efficiency in China and why?
The media in China has undergone extensive commercialization to become more market-driven over the last 35 years. Based on a sample of over two million newspaper articles, this study investigates whether the media in China has an incremental impact on stock price efficiency. We find that: as media c...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Elsevier
2016-06-01
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| Series: | China Journal of Accounting Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1755309115000362 |
| _version_ | 1819001347885760512 |
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| author | Jeong-Bon Kim Zhongbo Yu Hao Zhang |
| author_facet | Jeong-Bon Kim Zhongbo Yu Hao Zhang |
| author_sort | Jeong-Bon Kim |
| collection | DOAJ |
| description | The media in China has undergone extensive commercialization to become more market-driven over the last 35 years. Based on a sample of over two million newspaper articles, this study investigates whether the media in China has an incremental impact on stock price efficiency. We find that: as media coverage of a firm increases, (1) its stock price synchronicity decreases; (2) the probability of informed trading of its stock increases; and (3) the extent to which its stock price deviates from random walk decreases. Our inter-regional analysis over thirty-one provinces/regions within China reveals that the effects of the media on decreasing stock price synchronicity, increasing the probability of informed trading, and reducing stock price deviation from random walk are stronger in regions of weaker institutional development. Our findings suggest that a market-driven media can play the role of compensating for the underdeveloped governance institutions in transitional economies such as China. |
| first_indexed | 2024-12-20T22:47:46Z |
| format | Article |
| id | doaj.art-d022aecae35f4ae69e4fce9d366b148b |
| institution | Directory Open Access Journal |
| issn | 1755-3091 |
| language | English |
| last_indexed | 2024-12-20T22:47:46Z |
| publishDate | 2016-06-01 |
| publisher | Elsevier |
| record_format | Article |
| series | China Journal of Accounting Research |
| spelling | doaj.art-d022aecae35f4ae69e4fce9d366b148b2022-12-21T19:24:19ZengElsevierChina Journal of Accounting Research1755-30912016-06-01928311410.1016/j.cjar.2015.08.001Can media exposure improve stock price efficiency in China and why?Jeong-Bon Kim0Zhongbo Yu1Hao Zhang2School of Accounting and Finance, University of Waterloo, CanadaShenzhen Stock Exchange Research Institute, ChinaCollege of Business, City University of Hong Kong, Hong Kong, ChinaThe media in China has undergone extensive commercialization to become more market-driven over the last 35 years. Based on a sample of over two million newspaper articles, this study investigates whether the media in China has an incremental impact on stock price efficiency. We find that: as media coverage of a firm increases, (1) its stock price synchronicity decreases; (2) the probability of informed trading of its stock increases; and (3) the extent to which its stock price deviates from random walk decreases. Our inter-regional analysis over thirty-one provinces/regions within China reveals that the effects of the media on decreasing stock price synchronicity, increasing the probability of informed trading, and reducing stock price deviation from random walk are stronger in regions of weaker institutional development. Our findings suggest that a market-driven media can play the role of compensating for the underdeveloped governance institutions in transitional economies such as China.http://www.sciencedirect.com/science/article/pii/S1755309115000362Media exposureStock price efficiencyChina |
| spellingShingle | Jeong-Bon Kim Zhongbo Yu Hao Zhang Can media exposure improve stock price efficiency in China and why? China Journal of Accounting Research Media exposure Stock price efficiency China |
| title | Can media exposure improve stock price efficiency in China and why? |
| title_full | Can media exposure improve stock price efficiency in China and why? |
| title_fullStr | Can media exposure improve stock price efficiency in China and why? |
| title_full_unstemmed | Can media exposure improve stock price efficiency in China and why? |
| title_short | Can media exposure improve stock price efficiency in China and why? |
| title_sort | can media exposure improve stock price efficiency in china and why |
| topic | Media exposure Stock price efficiency China |
| url | http://www.sciencedirect.com/science/article/pii/S1755309115000362 |
| work_keys_str_mv | AT jeongbonkim canmediaexposureimprovestockpriceefficiencyinchinaandwhy AT zhongboyu canmediaexposureimprovestockpriceefficiencyinchinaandwhy AT haozhang canmediaexposureimprovestockpriceefficiencyinchinaandwhy |