The Impact of Media Sentiment on the Dynamic Adjustment of Corporate Capital Structure under the Moderation of Institutional Environment

Journal: Modern Economics & Management Forum DOI: 10.32629/memf.v7i2.5178

Tao Hu¹, Hongxiao Yin²

1. Department of Financial Technology, University of Science and Technology Liaoning, Anshan 114051, Liaoning, China
2. Department of Finance, University of Science and Technology Liaoning, Anshan 114051, Liaoning, China

Abstract

This study examines how media sentiment affects the speed of corporate capital structure adjustment and the moderating role of ownership nature. Using a sample of Chinese A-share listed firms from 2020-2024 (1,901 firm-year observations) and System GMM estimation, we find that positive media sentiment significantly accelerates adjustment toward target leverage. However, this effect is substantially weaker in state-owned enterprises (SOEs), indicating that ownership structure moderates the impact of media sentiment. The results are economically significant: a one-standard-deviation increase in media sentiment accelerates adjustment speed by 7.21 percentage points, but this effect is nearly fully offset in SOEs. Our findings integrate behavioral factors into capital structure theory and highlight the importance of institutional context.

Keywords

media sentiment; capital structure; dynamic adjustment; ownership structure; GMM

Full Text

PDF - Viewed/Downloaded: 2 Times

References

[1]Flannery, M. J., & Rangan, K. P. (2006). Partial adjustment toward target capital structures. Journal of Financial Economics, 79(3), 469-506.
[2]Tetlock, P. C. (2007). Giving content to investor sentiment: The role of media in the stock market. Journal of Finance, 62(3), 1139-1168.
[3]Kornai, J. (1986). The soft budget constraint. Kyklos, 39(1), 3-30.
[4]Fang, L., & Peress, J. (2009). Media coverage and the cross-section of stock returns. Journal of Finance, 64(5), 2023-2052.

Citing this article:

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License