Influence Analysis of Media Supervision in Corporate Governance

This article presents the importance of the role of media supervision in corporate governance by adopting stochastic dynamic optimal method of analysis. It also studies the influence of media supervision on embezzlement behaviour of large shareholders. Research demonstrates that when the occupation ratio of large shareholders is low and the intensity of media exposure is not high, fall in the value of firm assets is not obvious and, large shareholders can continue to improve occupation ratio to achieve higher welfare. After the occupation ratio of large shareholders reaches a certain level, their welfare loss because of media exposure damages firm asset value more than their income by occupation. Then, large shareholders continue to improve occupation ratio which will not only prevent maintenance of welfare level, but will also result in welfare loss. If the occupation ratio is improved through unfair means, they must give up illicit occupation. In addition, it further demonstrates that conspiracy of large shareholders and media will make them more likely to improve their own welfare by encroaching upon the interests of small shareholder. Based on the corporate governance practices of listed biotechnology and pharmaceutical companies in China, this article analyses the impact of media supervision upon these entities, products and processes.