Research On The Peer Effect Of Corporate Voluntary Disclosure

This paper examines the internal motives,external motives and economic consequences of the peer effect of corporate voluntary disclosure in China.Corporate voluntary disclosure can not only convey the true value of the company to investors and protect the rights and interests of investors,but also improve market transparency and promote the high-quality development of the capital market.However,for a long time,the enthusiasm of corporate voluntary disclosure is not high,which is mainly related to the relatively lagging development of voluntary disclosure system.Specifically,the voluntary disclosure of Chinese enterprises lacks the support of higher-level laws.The relevant regulations are mainly scattered in the rules and documents formulated by the China Securities Regulatory Commission(hereinafter referred to as the “CSRC”)and the stock exchange,and there is no systematic set of voluntary disclosure regulations.Until December 28,2019,the Standing Committee of the 13 th National People’s Congress revised the Securities Law of the People’s Republic of China(hereinafter referred to as the "New Securities Law"),which not only set up a separate chapter on "Information Disclosure",but also admit the legal status of the voluntary disclosure for the first time,which guides the establishment of companies’ voluntary disclosure system.After the promulgation of the new "Securities Law",the CSR and exchanges have successively revised or issued normative documents,the most important of which is to encourage companies to disclose voluntary information.Among them,the Shanghai Stock Exchange has also issued special guidelines for the application of self-regulatory rules based on the business models of companies listed on the Sci-Tech Innovation Board,to guide listed companies to disclose voluntary information in a standardized manner.Today,although China has initially established a voluntary information disclosure system for listed companies,the higher-level law is still a principle stipulation on voluntary disclosure.The standards for the division of objects are not uniform,which leads to enterprises having greater discretion in the implementation process,and there are irregular disclosure behaviors such as "selective disclosure","disclosure hotspots" and "window dressing".For example,on March 1,2020,at the beginning of the outbreak of the COVID-19 pandemic,which was also the first day of the implementation of the new "Securities Law",the exchange sent regulatory letters to a number of listed companies suspected of disclosure "vaccine" hotspots,and notified them of criticism.Therefore,how to improve the overall level of voluntary disclosure by listed companies is not only a key concern of regulators,but also an important issue that the academic community should research.Based on the above realistic background,this paper examines the peer effect of corporate voluntary disclosure,in order to provide feasible policy suggestions for regulators through the research conclusions,and also provide professional disclosure guidance for listed companies to improve the level of voluntary disclosure.Finally,this paper provide help for investors to better interpret corporate voluntary disclosure behavior and optimize investment decisions.At present,Chinese capital market reform has entered a deep-water zone,and the registration-based reform with information disclosure as the core is the top priority of capital market reform.The registration system reform requires listed companies to fully disclose information to protect the legitimate rights and interests of investors.Compared with mandatory information,voluntary disclosed has higher information content.Scholars have conducted rich discussions on the information content and motivation of corporate voluntary disclosure,but they have not yet jumped out of the economic framework of the classical rational model.In reality,people often cannot make optimal decisions like rational people,and even have some behavioral preferences.With the development of behavioral finance,it is found that more irrational behaviors of enterprises can be explained by behavioral models.For example,when making investment decisions,enterprises may not consider the rate of return of investment projects and the financial ability of enterprises,but based on the group the investment activities of most enterprises choose whether to invest or not.Scholars have conducted useful discussions on the peer effect of corporate investment,financing et cetera.This paper draws on relevant research theories to study the peer effect of voluntary disclosure by listed companies.Specifically,taking the A-share listed companies from 2010 to 2020 as a sample,selecting the voluntary management earnings forecasts as a proxy variable,using economics,economic sociology,psychology’s theory,such as: information Asymmetry theory,Signal theory,Bounded rationality,Embedded theory,Herd behavior,etc.,using the research method combining normative research and empirical research,according to the research idea of "problem posing,analyzing,problem solving",to examines the existence,the internal drivers,the external drivers and the economic consequences of peer effect of voluntary disclosure.Firstly,this paper examines the existence of the peer effect of voluntary disclosure by listed companies.The study document that there is a significant peer effect in the voluntary disclosure in Chinese company.The more voluntary management earnings forecasts disclosed by peer companies in the previous period,the greater the probability of companies disclosing voluntary management earnings forecasts in the current period.The empirical results are still robust after changing the instrumental variable measurement method,changing the model estimation method,removing samples,and using conference calls as a substitute variable for corporate voluntary disclosure.Further research also found that the peer effect of corporate voluntary disclosure only exists in the group of companies with higher levels of peer disclosure.In addition,industry follower companies will imitate the voluntary disclosure of industry leaders,but the opposite is not true,indicating that there are differences in information disclosure decisions between leaders and follower companies,and the voluntary disclosure decisions of leading companies are more rational and mature.This paper also finds that the higher the level of voluntary disclosure by peers,the greater the probability that companies will disclose good news.This shows that the information disclosure of listed companies in China still has the situation of "window dressing".On the other hand,it also shows that the quality of information disclosure in the overall market is not high,and it is difficult to improve the willingness of management to disclose bad news by improving the information environment of the industry and reducing investor uncertainty.Secondly,starting from the management’s personal motivation,this paper examines the internal motivation and consequences of the peer effect of corporate voluntary disclosure.The study found that companies with shorter age and CEOs without a financial professional background are more motivated to learn,so these companies are more inclined to imitate the voluntary disclosure behavior of peer companies.Further research on the economic consequences found that these companies with stronger learning motivation not only improved the willingness to disclose voluntary information,but also improved the quality of voluntary disclosure,manifested in higher accuracy of management earning forecast.In addition,management’s information advantage is another important internal reason for enterprises to imitate their peers’ voluntary disclosure.The study found that when the directors’ network structure holes are more abundant and the centrality is higher,the peer effect of corporate voluntary disclosure is more significant.Further research found that these companies with information advantages not only increased the willingness to disclose voluntary information,but also improved the timeliness of voluntary disclosure,which was manifested in that the disclosure date of the management earning forecast was shorter than the end date of the quarter or year.Thirdly,this paper examines the external motives and consequences of the peer effect of corporate voluntary disclosure from three aspects: corporate information requirements,industry competition and macro environment.The study found that the peer effect of corporate voluntary disclosure only exists in samples with higher external information demands,stronger industry competition,and greater economic policy uncertainty.Further research found that imitation behavior under different external motivations will bring different consequences.Specifically,imitation based on meeting external information needs can increase the attention of future investors of the company;imitation based on responding to industry competition pressure cannot significantly increase the market share of the company’s products;imitation based on coping with economic policy uncertainty can reduce the volatility of the company’s stock price,but it also reduces the accuracy of the management earnings forecasts.Finally,the conclusions of this paper can provide recommendations or guidance for regulators,listed companies and investors.For the regulators,it is necessary to refine the voluntary disclosure system of enterprises,pay close attention to the key minority,and give full play to the pioneering and exemplary role of voluntary disclosure by industry leaders.In addition,in the process of information disclosure supervision,due consideration must be given to the operation of enterprises,and focus on listed companies with complex social networks to prevent the transfer of benefits,such as leaking inside information.For listed companies,it is important to rationally disclose voluntary information to avoid blindly following the trend.In addition,company must reasonably weigh the costs and benefits of voluntary disclosure to ensure efficient disclosure and prevent excessive costs to the company.The company also should actively expand disclosure channels,and reasonable use of new media platforms to transmit information on enterprise value.For investors,one is to correctly identify the motivation for the voluntary disclosure behavior of enterprises and make rational decisions.The other is to rationally judge good news and avoid buying the winners.The research of this paper may have the following contributions: First,it enriches the research on the peer effect of corporate voluntary disclosure.This article is the first domestic article to examines the peer effect of corporate voluntary disclosure in China.Although there are recent studies on related topics abroad,the institutional background and research conclusions are different.Therefore,this paper supplements the domestic literature in related research fields.Second,the article enriches the literature on the externalities of corporate voluntary disclosure,and responds to scholars’ calls to study the information transfer mechanism of the industry and the externalities of information disclosure by peer companies,and provides empirical evidence from emerging economies using China’s capital market data.There have been articles on the externality of corporate information disclosure,except for a few that examine the externalities of corporate information disclosure behavior to other companies’ information disclosure behavior,most of them study the characteristics of corporate information disclosure to investors’ responses or information integration capabilities,analysts’ attention,and other companies’ investment behavior,innovation,cost of capital,stock price response,etc.This paper confirm that corporate voluntary disclosure can also generate externalities to other companies’ voluntary disclosure behavior,which can help management better understand and weigh the costs and benefits of corporate voluntary disclosure.Third,this paper examines the externality of voluntary disclosure by listed companies,and provides a reference for regulatory authorities to formulate more reasonable information disclosure supervision policies.