Financial Transparency, Media Coverage, and Momentum in China

Shu Heng Chen, Xia Ping Cao, Kun Ben Lin, Jing Bo Huang, Yubing Zhang, Hung Wen Lin*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

This paper digests the influences of financial transparency and media coverage in the Chinese stock market. In China, media performs under a regulatory system and media information is regarded as the direction of news. In addition, the Chinese market is dominated by retail investors and financial information is always manipulated, so the reliability of financial information is quite intriguing. The effect of ostensible financial information on the stock market through the media hype is a crucial issue. We employ media and transparency to analyze over 3,000 stocks in China. First of all, the Chinese stock market is characterized by significantly negative momentum profit and thus exhibits price reversal. However, when high media coverage and high transparency jointly come into play, the significantly negative momentum profit turns to be significantly positive. This dramatic change alters the price reversal to be price momentum. By contrast, low media coverage and low transparency still result in price reversal.

Original languageEnglish
Pages (from-to)625-637
Number of pages13
JournalEmerging Markets Finance and Trade
Volume58
Issue number3
DOIs
Publication statusPublished - 19 Feb 2022
Externally publishedYes

Keywords

  • G0
  • G10
  • G11
  • G14
  • Transparency
  • media coverage
  • momentum

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