“How Can One Remain Indifferent When Three Men Make a Tiger”: The Impact of Negative Media News on Foreign Divestment

Based on a micro-level database of listed companies, this study empirically examines the impact of negative media coverage on foreign capital withdrawal and its underlying mechanisms. The results indicate: First, negative media coverage significantly increases the probability of foreign capital withdrawal, with online media exhibiting an "amplification effect" in this process, a conclusion still true after a series of tests; second, reducing corporate net profit margins, intensifying financing constraints, and increasing stock market volatility are key channels through which negative media coverage elevates the probability of foreign capital withdrawal; third, the intensifying effect of negative media coverage on foreign capital withdrawal is more pronounced for non-state-owned enterprises, labor-intensive enterprises, and firms in highly competitive industries. Further analysis reveals that among various dimensions of online negative coverage, reports targeting company executives exert the most dominant influence. From an internal-external adjustment perspective, the study examines how strengthening corporate capabilities and government policy support mitigate the impact of negative media coverage. It indicates that improvements in corporate ESG performance, advancement of digital transformation, optimization of government administrative efficiency, and implementation of tax incentive policies can effectively reduce the shock of negative media coverage on foreign capital withdrawal. This study holds certain reference value for China in preventing foreign capital outflow risks and establishing a collaborative governance framework between enterprises and the government under the policy framework of "stabilizing foreign investment."