Research On The Information Transfer Effect Of Disadvantageous Announcements

China's listed company information disclosure includes periodic reports and temporary announcements. Periodic reports include annual reports and quarterly reports, and temporary announcements report significant events that have great impact on the listed companies. Investors pay much attention to periodic reports, but pay little attention to temporary announcements.On October 27,2005,《Chinese securities law》article 67 defines twelve significant events that should be reported in the temporary announcements. In 2007,《Measures for the administration of the listed company information disclosure》changed the significant events item from 12 to 21. We classify them to 1 advantageous event,8 disadvantageous events and 12 neutral events.U.S. financial crisis erupts in 2007, it has a big shock on America's economy, soon its influence spreads all over the world, and it proves that disadvantageous events have information transfer effect, so we think disadvantageous announcements may have information transfer effect to the related companies.This paper will take listed companies that disclose illegal, loss and business pause temporary announcements in Shanghai stock exchange and Shenzhen stock exchange in 2008 as research samples, construct a portfolio for the other companies in the same industry, then use event study to compute the portfolio's abnormal earning to reveal the information transfer effect. The results suggest that:First, illegal events have negative impact on the related companies. We subdivision illegal events, and then we found that different small samples have different impact. Specifically, Fine, Market stand, False statements, Error stocks transaction, Integrated industry and Information technology industry have negative impact, other small samples have positive impact.Second, illegal events have serious insider trading effect, the market has reacted before the listed companies disclosure temporary announcements, so insider traders can get extra income from the insider information.Third, loss temporary announcements forecast listed companies'income, it can effectively reduce the risk of market information asymmetry and effectively reduce price fluctuations. And also loss events have insider trading effect.Fourth, business pause event is good for the related companies, it has positive impact on the related companies and also has insider trading effect.