Corporate accidents, media coverage, and stock market responses: Empirical study of the Chinese listed firms
Abstract
Purpose
This study aims to explore the mutual relation of corporate accidents, stock market responses, and media coverage.
Design/methodology/approach
This paper empirically investigated 119 listed firms' accidents during the 2005-2012 period using the methods of event study, correlation analysis, and multiple regressions.
Findings
The stock market response and media response are independent with each other in the following 30 days after accidents. Corporate accidents have significant negative effects on the stock market responses. As time goes by, the market reaction tapers off. In a mediate term period, accident onset has significantly positive effect and firm's ownership has weakly positive effect in addition to factors of asset and number of shareholders.
Originality/value
This paper first examines the interrelationships among accidents, media coverage, and stock market responses. It is part of the corporate social responsibility to avoid or reduce the stakeholders' nervous behaviors in times of accident. Hence, accident-stricken firms should release sufficient and transparent information to shareholders so that they can trade the share more rationally.
Keywords
Acknowledgements
The authors are grateful to the National Natural Science Foundation of China (610041008, 91024027, 71373250) and the Program for New Century Excellent Talents in University (NCET-09-0920) funded this research.
Citation
Wei, J., Wang, H., Fan, J. and Zhang, Y. (2013), "Corporate accidents, media coverage, and stock market responses: Empirical study of the Chinese listed firms", Chinese Management Studies, Vol. 7 No. 4, pp. 617-630. https://doi.org/10.1108/CMS-09-2013-0171
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited