Research On The Mixed Ownership Reform And Information Disclosure Behavior

Shareholder structure is the core issue in the field of corporate governance.Since the Third Plenary Session of the 18 th Central Committee of the Communist proposed the development of mixed ownership economy,the mixed ownership reform has become a key content and concrete manifestation of China's current economic restructuring at the micro-enterprise level.The essence of the mixed ownership reform is the integration of state-owned capital,private capital and foreign capital.Through relying on the multi-shareholder structure of mixed ownership and its operating mechanism,combine the state-owned capital's advantages in scale,resources,technology and management and the private capital's advantages in flexible market mechanism,operational efficiency and entrepreneurial spirit,and learn from each other to achieve the ‘1+1>2' governance effect.In the past 40 years of the reform and opening up,the private economy has always been an important part of the Socialist Market Economy.Private enterprises have contributed much to the rapid growth of China's economy,the labor employment opportunities,and tax revenue.In 2018,Present Xi Jinping emphasized ‘Chinese government supports private enterprises to participate in the reform of state-owned enterprises with a more open attitude and more pragmatic measures,develops the mixed ownership economy,and promotes the coordinated development of state-owned enterprises and private enterprises' at the symposium of private enterprise.The new round of the mixed ownership reform does not only refer to state-owned enterprises opening its doors to private capital,but refers to state-owned and private enterprises invest each other to realize a mixed equity structure.At present,both in the practical and theoretical circles,they pay much attention to private enterprises investing in state-owned enterprises,while less attention to state-owned enterprises investing in private enterprises,an alternative form of the mixed ownership reform.Therefore,this paper mainly discusses the influence of state-owned enterprises investing in private enterprises on information disclosure.By summarizing relevant literature and theories,and sorting out the development of China's mixed ownership economy and the policies of the mixed ownership reform,this paper finds that under the new round of mixed ownership reform,state-owned shareholders investing in private enterprises is different from the previous concept of "Nationalization" and the phenomenon of ‘the state advances,the private retreats'.At present,China's mixed ownership reform is under the institutional background of theSocialist Market Economy and the premise of public ownership as the mainstay and aims to adapt to the new situation of market economy development and international market competition.At the same time,state-owned enterprises no longer use the advantages of policy and resource to occupy the market opportunities of private enterprises in order to become bigger and stronger in the new round of mixed ownership reform.The mixed ownership reform creates opportunities and platforms for the cooperation between state-owned capital and private capital.Before the empirical research,this paper selects three listed companies,Foshan Lighting(000541.SZ),Nanguo Real Estate(002305.SZ)and Shangfeng Cement(000672.SZ),to conduct a multiple case analysis.I specifically research the process of three private enterprises participating in the mixed ownership reform and compare the differences in board structure,financing scale,political support,financial performance and information disclosure behavior before and after participating in the mixed ownership reform,which provides the most direct evidence for private enterprises participating in the mixed ownership reform affecting information disclosure.I further find how private enterprises participating in the mixed ownership reform influence information disclosure behavior,which paves the way for subsequent empirical research.The main conclusions of this paper are as follows:First,private enterprises participating in the mixed ownership reform improves the timeliness of information disclosure.Specifically,after the state-owned shareholders investing in the private listed companies,the time lag of annual financial report disclosure is shortened.By further considering the heterogeneous role of the internal and external governance mechanism,the result shows that in the listed companies where shareholders appoint directors and the organization of Communist Party of China participates in the corporate governance,the timeliness of information disclosure improves more significantly;when the listed companies are followed by more analysts and owned by more institutional shareholders,the timeliness of information disclosure improves more significantly,which shows that the internal and external governance mechanisms play a restricted and normative role in the information disclosure behavior of listed companies.Therefore,the impact of the mixed ownership reform on the timeliness of information disclosure becomes more significant.Further analysis shows that the company's financial report becomes more concise after participating in the mixed ownership reform,then improves financialreport completion efficiency;the auditor's audit risk is reduced,so reducing some necessary audit procedures shortens the completion time of audit reports and improves the timeliness of annual financial reports.Second,private enterprises participating in the mixed ownership reform increases the similarity between the current financial report and the last financial report.This paper uses machine learning method to process the text of financial reports and calculates the similarity between the current financial report and the last financial report.Specifically,after the state-owned shareholders investing in the private listed companies,the textual similarity of annual financial report is increased.Through grouping test,I find that when the organization of Communist Party of China does not participate in the corporate governance and institutional shareholders hold less stock shares,the participation of private listed companies in mixed ownership reform leads to a more significant increase in the textual similarity.This result shows that when the internal and external governance mechanisms are weaker,the textual similarity of financial reports are higher.Further tests find that state-owned shareholders investing in private listed companies significantly improve the ability to acquire credit financing resources and political resources.The amount of long-term debt,bank loan,government subsidy and the ratio of long-term debt increase significantly,which effectively alleviates the financing constraints of private listed companies.The improvement of resource acquisition ability reduces the motivation of information disclosure and the information content of financial reports,resulting in an increase in the similarity of financial report.Third,private enterprises participating in the mixed ownership reform reduces earnings management.Specifically,after the state-owned shareholders investing in the private listed companies,the real earnings management is decreased.And when external institutional shareholders hold more stock shares and the organization of Communist Party of China participates in the corporate governance,earnings management declines more significantly.By further examining the mechanism of the mixed ownership reform reducing earnings management,I find that the improvement of corporate governance and the ability of resource acquisition are the main reasons.Specifically,after state-owned shareholders participate in private listed companies,the capital occupied by the related parties significantly reduces,which shows that state-owned shareholders help to curb and supervise the behavior of private controlling shareholders to maximize their controlling interests,and thequality of corporate governance is constantly improving.The increasing amount of credit financing and government subsidies eases the problem of “finance hard and finance expensively” for private enterprises.The company's motivation for earnings management based on the “Debt Contract Hypothesis” becomes weaker.However,the state-owned shareholders investing in private listed companies do not lead to an increase of “political costs” significantly,namely there is no evidence to support that the decline of earnings management results from the “Political Cost Hypothesis”.The main contributions of this paper are as follows:First of all,this paper expands the research on the economic consequences of the mixed ownership reform.The existing research on the mixed equity structure and the mixed ownership reform mainly focuses on corporate performance,R&D innovation,investment decision-making,corporate governance,cash holding(Zhang Xiangjian et al.,2015;Liu Wei et al.,2016;Hao Yanghe Gong Liutang,2017;Wang Yewen and Chen Lin,2017;Wang Xin and Han Baoshan,2018;Yang Xingquan and Yin Xingqiang,2018),but few papers research the impact on corporate information disclosure and its mechanisms.What is more,the existing research takes state-owned enterprises as objects of study,and pays attention to the influence of private enterprises investing in state-owned enterprises on state-owned enterprises.This paper takes private enterprises as objects of study and researches the economic consequences of the mixed ownership reform from the perspective of information disclosure,which helps us have a thorough understanding of the impact of state-owned shareholders investing in private listed companies on the corporate decision-making behavior of private listed companies.Secondly,this paper enriches the research of the influencing factors of information disclosure.As the shareholder structures of foreign listed companies are in a relatively stable state,it is impossible to examine the impact of equity structure adjustment on corporate behavior from a dynamic perspective.Based on China's unique institutional background,this paper dynamically examines the impact of state-owned shareholders investing in private companies on the timeliness of information disclosure,the textual characteristics of information disclosure,the quality of accounting information disclosure,and its mechanism,which provides us the most direct empirical evidence on the relationship between shareholder structure and information disclosure.Thirdly,this paper further explores the impact of the heterogeneity of theexternal governance mechanism and internal governance mechanism on the relationship between the mixed ownership reform and information disclosure.This paper examines how the proportion of external institutional shareholders,analysts following,the directors appointed by shareholders,and the participation of organization of Communist Party of China in corporate governance adjust the relationship between the mixed ownership reform and information disclosure,which makes up for the gaps in previous research in this field.Finally,the conclusions of this paper have important practical guiding significance and policy implications.This paper shows that state-owned shareholders investing in private listed companies can improve corporate governance and the abilities of resource acquisition,and combine the resource advantages of state-owned capital and the market advantages of private capital,thus affect the private company's information disclosure behavior.These conclusions have important policy implications for promoting the mixed ownership reform and stimulating the vitality of state-owned capital and private capital in the future.At the same time,these conclusions have important guiding significance for investors' investment decision-making in the capital market and regulatory agencies' regulation on the information disclosure behavior of listed companies.