Taking the listed companies from 2012 to 2018 as the original sample, this paper manually collects the data of illegal reduction of large shareholders, and uses the PSM method to match the samples of the experimental group（illegal reduction group）with the samples of the control group（regular reduction group）. Then, it empirically tests the impact of media coverage on the illegal reduction of large shareholders of listed companies. The results show that the more the media coverage of listed companies, the lower the possibility of illegal reduction of large shareholders, and the effect of negative coverage is more significant. But there is no significant difference in the supervision effect of media coverage on the illegal reduction of controlling and non-controlling large shareholders. In further research, this paper discusses the intermediary path and regulation mechanism of media coverage on the restriction of large shareholders’ reduction. The results show that in the immature capital market, it is difficult for the media to restrict the illegal reduction of large shareholders by improving the effectiveness of corporate internal control, but it can rely on administrative intervention to realize its corporate governance function.

The main contributions are as follows: Firstly, this paper studies the impact of media coverage on the illegal reduction of large shareholders, so as to provide a new perspective for the protection of the interests of small and medium-sized investors. Secondly, this paper uses the PSM method to obtain two group paired samples, and then uses the event study to extract the reporting times of financial media coverage in the long and short window periods. Based on this, it analyzes the impact mechanism and effect of the “soft constraint” of media daily supervision on the reduction behavior of large shareholders. Because the data used in regression analysis is “clean”, which eliminates interference factors and endogenous problems as much as possible, it can more accurately identify the supervision effect of media coverage on the illegal reduction of large shareholders. Thirdly, based on the reputation mechanism and administrative intervention mechanism, this paper discusses the intermediary effect and regulation effect of media governance from the micro and macro perspectives, and deeply analyzes the path and mechanism of media governance. The results provide a theoretical and practical basis for the financial media to alleviate the Second Agency Problem, which not only enriches the relevant research results of the role of media coverage on corporate governance, but also provides a reference for regulatory authorities to supervise the illegal reduction of large shareholders and protect the interests of small and medium-sized shareholders.