The Influence of the Newspaper Media on the Corporate Governance Practices of Irish Listed PLCS

40 Pages Posted: 30 Jul 2009 Last revised: 1 Sep 2009

See all articles by Louise Gorman

Louise Gorman

Dublin City University - Learning, Innovation and Knowledge Research Centre (LINK)

Theodore G. Lynn

Irish Centre for Cloud Computing and Commerce

Mark L. Mulgrew

affiliation not provided to SSRN

Date Written: June 1, 2009

Abstract

While a great deal of research has focused on the factors driving adoption of codes of best practice in corporate governance, only recently has the influence of the news media been considered. Corporate governance literature has largely converged upon internal monitoring and shareholder activist strategies as methods of shareholder protection following the decline of the market for corporate control. Commentators and activists alike have generally neglected the opportunity for an independent party, which watches over the management of companies, to guard shareholders’ interests. Ireland is just one country where the value of media coverage of corporate governance violations to: (i) shareholders, (ii) policymakers and (iii) company directors has not been assessed. This paper investigates the reaction of these groups to newspaper coverage of corporate governance violations so as to determine the influence of the newspaper media on the corporate governance practices of public limited companies (plcs) listed on the Irish Stock Exchange. Using newspaper articles, media activity was analysed and measured in 15 instances of corporate governance violations and the relationships between this activity and the actions and behaviours of investors, policymakers and company directors as indicated by stock market data , government reports and newspaper articles respectively were examined. Evidence from this study suggests that the Irish newspaper media influences (i) the boards of directors of Irish listed plcs, in that subsequent newspaper articles report reformatory measures taken by the boards in the vast majority of companies in the sample; (ii) the government authorities who are responsible for the legislative and regulatory infrastructure in which they operate, with statistical evidence of increases in government attention to corporate governance issues following increased newspaper coverage of theses issues and (iii) the investing decisions of investors in Irish listed plcs, with statistical verification of a relationship between movements in share price and volumes of newspaper articles relating to corporate governance violations by listed companies.

Keywords: corporate governance, media, ireland, market for corporate control, monitoring, policymaking

Suggested Citation

Gorman, Louise and Lynn, Theodore G. and Mulgrew, Mark L., The Influence of the Newspaper Media on the Corporate Governance Practices of Irish Listed PLCS (June 1, 2009). Available at SSRN: https://ssrn.com/abstract=1440637 or http://dx.doi.org/10.2139/ssrn.1440637

Louise Gorman (Contact Author)

Dublin City University - Learning, Innovation and Knowledge Research Centre (LINK) ( email )

Dublin
Collins Avenue
Dublin, NA Dublin 9
Ireland

HOME PAGE: http://www.link.dcu.ie/

Theodore G. Lynn

Irish Centre for Cloud Computing and Commerce ( email )

Dublin
Collins Avenue
Dublin, NA Dublin 9
Ireland
35317006873 (Phone)
35317005446 (Fax)

Mark L. Mulgrew

affiliation not provided to SSRN ( email )

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