Media Attention, Capital Market Mispricing and Corporate Investment

HU Guo-qiang; XIAO Zhi-chao

Volume 34 Issue 2

May 2021

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Article Navigation > Journal of Guangdong University of Finance & Economics > 2019 > 34(2): 60-73

HU Guo-qiang, XIAO Zhi-chao. Media Attention, Capital Market Mispricing and Corporate Investment[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(2): 60-73.

Citation:

HU Guo-qiang, XIAO Zhi-chao. Media Attention, Capital Market Mispricing and Corporate Investment[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(2): 60-73.

HU Guo-qiang, XIAO Zhi-chao. Media Attention, Capital Market Mispricing and Corporate Investment[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(2): 60-73.

Citation:

HU Guo-qiang, XIAO Zhi-chao. Media Attention, Capital Market Mispricing and Corporate Investment[J]. Journal of Guangdong University of Finance & Economics, 2019, 34(2): 60-73.

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Media Attention, Capital Market Mispricing and Corporate Investment

HU Guo-qiang¹,
XIAO Zhi-chao²

1.
School of Accounting, Tianjin University of Finance and Economics, Tianjin 300222
2.
School of Management, Sun Yat-sen University, Guangzhou 510275, China

Received Date: 2018-09-11
Available Online: 2021-05-29
Publish Date: 2019-04-28

Abstract

Abstract

Based on the perspectives of information asymmetry and behavioral finance, the paper employs the data from Chinese A-share market to examine that media attention plays dual roles of information and sentiment in stock mispricing, but both follow different paths. Media largely plays information role in relieving the undervaluation, while it implements sentimental functions in increasing the overvaluation. The results from mediation effect tests show that media attention significantly inhibit the decreasing of investments through relieving the stock undervaluation, but significantly exacerbates the investment expansion through aggravating the stock overvaluation. Further, this paper finds that media attention reduces the level of information asymmetry of the undervalued firms, alleviating the lack of investment caused by stock undervaluation, while increases the investors' irrationality of overvalued firms, exacerbating over-investment caused by stock overvaluation. In conclusion, this paper indicates that media has both governance and exacerbation effects on the efficiency of capital allocation through capital market misvaluation. The research helps us understand the function mechanism of media in the capital market, and provides references for how media as information intermediary in financial market improve the development of real economy.
- media attention,
- stock mispricing,
- corporate investment,
- information intermediary,
- media sentiment,
- capital market,
- behavioral finance

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References(44)

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