The Research On Voluntary Disclosure Behavior In Chinese Listed Companies

Chinese securities market which established in early90s last centuries has developed nearly20years. Compared to western developed countries, Chinese securities market has achieved a rapid development in a short time. There are more than1600listed companies in Shanghai and Shenzhen. With continuous improvement in system construction and market efficiency, the governance structure of listed companies has become more and more rational. While affirming achievements, we can’t ignore problems especially the low level of voluntary disclosure. In a sense, securities market is essentially an information market. Its core question is whether stock prices reflect company’s information timely and accurately. With frequently information asymmetry, information risk as an important component of systematic risk has impeded the resource allocation efficiency. The key to solve this problem is enhancing information disclosure system of listed companies. Information disclosure includes mandatory disclosure and voluntary disclosure. The former means compliance with laws and regulations for listed company. Voluntary disclosure means self-interest behavior for management. What’s the motivation of voluntary disclosure behavior? How the behaviors affect external investors’ interests? Both questions are important theoretical and practical problems. This paper makes theoretical and empirical research on corporate governance and voluntary disclosure. There are6chapters:Chapter1:IntroductionThis chapter describes the research background, significance, method, logic, content, structure, innovation, lack and definition of basic concepts.Chapter2:Voluntary disclosure and corporate governanceFirstly, this chapter explains the meaning of voluntary disclosure and summarizes voluntary information disclosure including listed company background, performance, core products, technology, internal controls, human resources, unrecognized intangible assets, social responsibility performance and derivative financial instruments. Secondly, this chapter analyzes meaning of corporate governance, related issues, mechanisms and models. The related issues include capital structure, investment policies and ownership structure. The mechanism includes internal governance and external governance. The models include Anglo-American model, German-Japanese model and family model. Thirdly, this chapter analyzes the relationship between voluntary disclosure and corporate governance. With reference to OECD statement that information disclosure and transparency are important principle to improve corporate governance, this paper believes voluntary disclosure has effect on corporate governance. To be precise, the goal of information disclosure mechanism is increasing listed companies transparency. This is one of principles to improve corporate governance.Chapter3:The theory and practice development and status quo analysis of voluntary disclosureFirstly, this chapter introduces theoretical basis of voluntary disclosure. It is efficient market hypothesis, enterprise contract and information economics theory. Secondly, focus on disclosure motivation, measurement standards, factors and economic consequences, this chapter pointed out shortcomings of voluntary disclosure. Finally, compared to related regulation in other countries, this chapter explains the historical evolution of information disclosure system and summarizes the internal logic of practical development.Chapter4:Empirical study on voluntary disclosure and protection of outside shareholders interestsOutside investors including outside shareholders and creditors are main demanders for voluntary information disclosure. This chapter concerns on the relation between voluntary disclosure level and protection of external shareholders interests. Firstly, the paper divides external shareholders into small and medium investors and institutional investors. Their sources of information are different. Therefore, voluntary disclosure is divided into targeted and non-targeted information. On this basis, this chapter presents assumptions of empirical research. The study objectives are A share listed in Shanghai Stock Exchange listed during2008. The observed variables for external shareholder return are cumulative annual return on equity. The proxy variables of targeted and non-targeted voluntary disclosure level are percentage of institutional ownership and number of provisional announcement. According to4factors, such as company size control, profitability, industry, the regression result shows voluntary disclosure level is significantly positive correlation to external shareholder returns.Chapter5:Empirical study on voluntary disclosure and protection of creditors’interestsListed companies creditors include banks and corporate bonds holders. Their protection involves risk and return on investment. The study objective is the same to chapter4. The observation variables of creditor’s risks and returns on investment are interest coverage ratio and interest rates of debt capital. According to two factors, such as company size control and asset-liability ratio, the regression result shows that voluntary disclosure level is no significant correlation to the creditor’s interests. The writer analyzes the reasons for this result.Chapter6:Policy recommendationsFirstly, this chapter summarized corporate governance effects of voluntary disclosure. Secondly, this paper believes that there are three major factors, including executive subjective factors, internal and outside governance mechanisms. Started from actual situation in China, executive subjective factors are mainly operating performance. Internal corporate governance involves degree of concentration in ownership, board independence and separation of chairmanship and CEO. Outside corporate governance includes company size and degree of participation in creditors and institutional investors. The proxy variables of voluntary disclosure level are number of provisional announcement. According to7factors, such as operations results, ownership concentration, board independence, segregation of chairmanship and CEO, company size, financial leverage, percentage of institutional ownership, the regression result shows that, in addition to three factors of internal company governance, voluntary disclosure level is significantly positive correlation to the other four variables. Finally, this paper proposes policy recommendations to improve voluntary disclosure behavior and governance effects.There are three innovations of this paper:First, although domestic and international literature has made a lot of achievements on economic consequences of voluntary disclosure, they’re almost how disclose behavior affect on cost of capital and stock value. The research rarely concerns on protection of outside investors interests. This paper is on the position of outside investor protection and divide outside investors into small and medium investors, institutional investors and creditors. This paper verifies the relationship between voluntary disclosure level and three protections of interests.Second, based on analysis of information disclosure channel, this paper divides the voluntary information into targeted and non-targeted information. The former is the main source of information for small and medium investors. The latter is monopolized by institutional investors. This paper verifies two types of disclosure behavior have positive correlation to outside shareholders earnings.Third, research on relation between institutional investors and voluntary disclosure level (mainly non-targeted) are empty proposal and no empirical evidence. By constructing empirical models of factors in voluntary disclosure behavior, this paper firstly demonstrates increasing institutional investors has significantly positive effect on voluntary disclosure and proportion of shareholding.There are also a lot of shortcomings in this paper, for example, not sufficiently grasping the integrity of theory. This paper systematically describes the relation between voluntary disclosure and protection of external investors’ interests. But the corresponding solution may be a theoretical deduction, whether it is feasible, there may be a little problem. That will prompt me to learn continuously in the future.