More exposure, greater rationality? Evidence from media pressure and investment deviations in agricultural firms

This study examines whether media pressure improves the rationality of corporate investment decisions in agricultural firms—a sector characterized by relatively high information asymmetry and weak external governance—and investigates the underlying mechanisms and heterogeneous effects. The results show that media pressure significantly reduces investment deviations in agricultural firms, suggesting that media monitoring serves as an effective external governance mechanism in this sector. Media pressure mainly reduces investment deviations by curbing overinvestment, while its role in alleviating underinvestment is limited. Mechanism tests reveal that the media’s governance effect operates through three channels: mitigating agency problems, strengthening reputational penalties, and improving information disclosure. We further find a substitution effect between government oversight and media monitoring. Specifically, the governance effect of media pressure is significant for firms with lower government subsidies but insignificant for those with higher government subsidies. Overall, our findings show that media monitoring acts as an important external governance mechanism for improving investment efficiency in agricultural firms and provide empirical evidence to optimize resource allocation and strengthen external governance systems.