Abstract: Using a sample of A Share listed companies in Shanghai and Shenzhen stock exchanges from 2007 to 2014 in China, we select the number of media coverage from eight original authoritative newspapers as proxy variable and empirically test the corporate governance effect of the media from a perspective of accrual-based and real earnings management activities. We believe that media has become a new way to govern earnings management in transition country. We also investigate the differences of the media governance effect between state-owned enterprises and non-state-owned enterprises. Our results indicate that media coverage makes managers tend to accruals manipula-tion to a certain extent. However, media coverage can effectively inhibit the real earnings management activities in listed firms. The study reveals that compared with state-owned firms, private firms are more inclined to choose accruals manipulation while the state-owned com-panies will restrict the governance role of media on real earnings management. It's worth noting that the media's role of corporate govern-ance is influenced by the development degree of media environment. The findings of our study contribute to the existing study on the cor-porate governance role of media. Our paper finds and builds the watchdog role of the media, which would be significant for effective gov-ernance of the earnings manipulation.

Key words: media coverage, ownership property, accruals earnings management, real earnings management, corporate governance