Stock Liquidity And Accounting Information Quality

The year 2014 was particularly meaningful for the new three board, since the new three board expanded and the market making system was finally realized on the three board. The introduction of the market making system brings vitality to the new three board. Most importantly, it increases the liquidity of he three board market,which provides more reasonable and stable valuation for the companies listed on the three board. Also, it helps to stabilize the stock prices, increase the transparency of the markets, solve the problem of information asymmetry and improve the security of transactions. Unlike the market making system, the system of trade by agreement that was used by the new three board can be realized only when the same prices and quantities occur, for the system of trade by agreement is performed in the way of negotiating pricing and pairs trading. In this way, it is easy to produce high cost. Thus,the transparency of the market is relatively weak in the system of trade by agreement,and the turnover of capital is slow. Even worse, the capital chain breaks and the market fluctuation is aggravated. Looking back on the past years, we will find that the breakup of the financial crisis was rooted in the immobilization of market. Therefore,in a market of low fluidity, companies are easy to encounter financial crisis and some managers have to escape because of financial problems. On the contrary, in a market of high liquidity, the capital can create more value and companies are more stable.Accordingly, the market brisks upThen, is the enhancement of market liquidity effective to compel the companies to provide more objective and reliable accounting information to the users? In view of this, this paper chooses the companies listed on the new three board. The samples are divided into companies of the market making system and the companies of the system of trade by agreement. And this paper aims to find the changes of stock liquidity before and after the implementation of the market making system, as well as the influences of the changes on the quality of accounting information. The empiricalresults show:the relationship between the stock liquidity and the quality of accounting information is positive correlation.For specific performance:(1) The extent of real earnings management of companies that adopt market making system is relatively low, compared to those companies that adopt the system of trade by agreement, and the quality of accounting information of the companies that adopt market making system is better than that of the companies that adopt the system of trade by agreement;(2) For the same company, the extent of real earnings management is also different before and after market making, the former is relatively high. The empirical results of this paper show, the stock liquidity is useful for external supervision. And the companies of high stock liquidity are better than those of low stock liquidity in terms of accounting information quality. Further study, the adverse effect that the liquidity has on accounting information is mostly realized by the reduction of agency cost and control the extent of earnings management.The research of this paper provides theoretical basis and practical guiding for external corporate governance. The paper also explains the market making system was finally realized on the three board is useful to improve stock liquidity and accounting information quality, so as to facilitate the development of the new three board. This paper holds that the external governance is not only performed by external audit and institutional investors, but also the self-regulation of the market.By the improvement of market liquidity, the corporate governance can be enhanced by its reaction.