The Effects Of Investors Protection Form Information Disclosure

Information disclosure in favor of investors protection,which is a common view shared byboth theorists and practitioners alike, but Illegal Disclosure of listed company occurs from timeto time. How Information disclosure influence investors' protection, is the core of this paper.With the coordination of legal system, social norms and market mechanism, informationdisclosure system has improved step by step for the purpose of protecting investors. Due todiversity at internal construction of information disclosure, the information disclosure qualitiesof listed company still were difference. After discussing the related theory of effects frominvestor protection,it has mainly structured mechanism how information disclosure carry outthe protection of investors from the aspects of disclosure pricing and governance functions. Atlast, it selects date of listed company in Shenzhen stock exchange at year2007to2010, andtests how disclosure quality of listed company influences investors' protection.Through the theory and empirical analysis, the article concluded:1. the investors'protection of disclosure mechanism mainly displays in: the one hand, with the company'saccounting, financial and internal audit system the disclosure mechanism supervise insiders'misappropriating behavior, assist the internal management in order to protect investors; on theother hand, After releasing information which from internal disclosure mechanism, it willreduce agency problem between company and investors, guide investors' decisions and affectcapital supply in capital market, which affect the listed company financing cost and asset prices.2. From the aspects of pricing function, selected equity cost of capital to show the effects ofinvestors' protection and disclosure quality to set the regression model. The result of test showsthat disclosure quality and equity cost of capital is negatively related.3. From the aspects ofgovernance function, according to the agency problems between controlling shareholder andexternal shareholders, the test selects embezzlement of funds to show the effects of investors'protection and disclosure quality to set the regression model. Embezzlement of funds is themisappropriating behavior of controlling shareholders who aim to maximize their own interests,the less misappropriating behavior the better. While the result of test shows that disclosurequality and misappropriating behavior is negatively related.The main contribution of this study include:1. this article discussed the evolution of the information disclosure institution from the development of investors' protection.2. Althoughdisclosure is more sufficient,the protection of investors the better in most related studies,butdid not elaborate concrete mechanism. Starts with the effects of investors' protection, then itilluminate what is the mechanism and path disclosure influence investors' protection whendisclosure plays its own role.3. According to theoretical analysis, as target reducing agencyproblems between company and investors, also between controlling shareholders and externalshareholders, it tests the disclosure quality and the main effect of investors' protection.