The Study Of The Effects Of The Quality Of Information Disclosure On The Information Asymmetry

The effects of the quality of information disclosure on the information asymmetry have being bound to study at home and abroad.Research in this area, firstly the foreign scholars carried out a train of theoretical research,then quantitative the level of the quality of information disclosure and the information asymmetry,used the regression models to verify the effects of the quality of information disclosure on the information asymmetry.Recently,domestic scholars also have done some relevant researches,Chen(2007),Zhang and Wu(2007) researched the relation of the information disclosure and the information asymmetry level in China,verified the relevant relation between them from empirical research angle.But all of the above researches can't reveal the inherent mechanism of the effects of the quality of information disclosure on the information asymmetry.Our sample is based on firms listed on Shenzhen Stock Exchange,we used the SZSE Information Disclosure Scores as our empirical proxy for a firm's disclosure quality,relied on the Probability of Informed Trade(PIN) to proxy for the level of information asymmetry,researched the relation between them.The results showed that,the improvement of information disclosure reduced the information asymmetry level on the stock market.Based on this,we decomposed of the PIN index and constructed two sub-indicators from it,private information events occur probability (α) and relative amount of trading by privately-informed investors(ν).Through regression analysis,revealed the way information disclosure impacted on the information asymmetry.Research results showed that,raising the level of information disclosure have significant effect on reducing the private information events occur probability and the relative amount of trading by privately-informed investors, thereby reduced the information asymmetry level on market.In other words, information disclosure,mainly through changing the relative amount of trading by privately-informed investors and the private information events occur probability, changes the level of information asymmetry in China.