Research On Market Reaction From Correcting Public Notices Of Annual Report Of Chinese Listed Companies

The information concerning anything important of the corporations published by thelisted companies is the cornerstone of the sound existence and development of the stockmarket of China. An effective stock market can only be maintained through publication ofthe true, complete and timely information of the listed companies. Since the stock marketwas set up, a series of legal rules and regulations have been enacted by the legislature, suchas the Securities Law, the Corporation Law, the Provisional Regulations of SupervisoryControl of Stock Issuance and Transaction, the Operative Bylaws of Publication of theInformation of the Company Issuing Stocks to the Public, the Edit Regulations ofPublication of the Information of the Company Issuing Securities to Public and so on and soforth, which formed a preliminary scheme of the supervisory control of publication of theaccounting information of the listed companies of China. However, in the recent yearsnotices of addition and correction on the annual reports appear more and more frequently,coveting every respect of the annual report. Meanwhile, the time of publication fluctuatesfrom 2 months to 2 days after the annual report. Accordingly, for the publication ofinformation of the stock market of China, serious problems still exist in content or form.The report analyzes correcting public notices on annual report of Chinese company,which has been announced frequently in Chinese security market listed these several years.The study is instructed by the disclosure theories on security market, and on the bases of thestatistic concerning the content and time for all correcting public notices on 2002 and 2003annual reports.We can get the following conclusions from our research: Firstly, the listed companies ofChina are intended to postpone or delay correcting public notices. Secondly, the later thelisted company publishes the correcting public notices, the violent the market reaction is.Lastly, correcting public notices published by the listed companies play an important role inthe stock trading volume.