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Volume 34 Issue 3
Aug.  2020
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Article Navigation >  Accounting and Economic Research  > 2020  >  34(3): 16-35
Hu Guoqiang, Zhen Yuhan, Xiao Zhichao. 2020. Does Media Attention Inhibit Managers’ Catering Behavior of Investment? A Perspective of Agency Cost. Accounting and Economic Research, 34(3): 16-35.
Citation: Hu Guoqiang, Zhen Yuhan, Xiao Zhichao. 2020. Does Media Attention Inhibit Managers’ Catering Behavior of Investment? A Perspective of Agency Cost. Accounting and Economic Research, 34(3): 16-35.
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Does Media Attention Inhibit Managers’ Catering Behavior of Investment? A Perspective of Agency Cost

  • 1.

    School of Accountancy, Tianjin University of Finance and Economics, Tianjin 300222, China

  • 2.

    School of Management, Sun Yat-Sen University, Guangzhou Guangdong 510275, China

  • Received Date: 2019-04-24
  • Publish Date: 2020-05-25
    Abstract
  • From the perspective of agency cost, we empirically examine the effect of media attention on managers’ catering behavior of investment and its mechanisms. We find that media attention significantly inhibits managers’ catering behavior of investment, in particular the investment expansion due to stock overvaluation. The effect of media attention is more significant for managers with stronger motivations of equity-based compensation and private benefit of control rights. We also find that the inhibiting effect plays through governance mechanism rather than reputation mechanism. Moreover, the inhibiting effect is more significant in firms with higher information asymmetry and higher agency costs, and is mainly from authoritative and policy-oriented media. Finally, we find that media attention significantly inhibits the overinvestment due to stock overvaluation, and improves the investment efficiency in general. In conclusion, our findings suggest that media plays a positive governance role in inhibiting managers’ catering behavior of investment originated from self-benefit motivation, and thus improves the efficiency of resource allocation.

     

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