On Quality Of IPO Sponsor System For Information Disclosure

In recent years, some initial-public-offering companies were frequently reported fraud of information disclosure, each fraud incident caused serious volatility in stock market, and investors suffered a big loss. In fact, the poor quality of information disclosure is only the appearance of the problem, the fundamental reason is the China’s issue and audit system of securities market is imperfect, so that the market failed to provide effective incentives to improve the quality of information disclosure on the IPO companies by legal means. Different from the registration system in developed markets, China’s securities market still use the approval system at present, because its imperfect mechanism, as well as less mature investors, etc. Due to original information asymmetry exists between the company and the regulatory authority, in order to alleviate this kind of information asymmetry, the sponsor system was introduced, for the constraints from the sponsor reputation mechanism to information disclosure quality of IPO company. Although original intention of the sponsor system is good, the implementation process still appears some the IPO company information disclosure fraud problem, the sponsor system was questioned a lot. Whether or not the sponsor system can effectively improve the quality of information disclosure of the IPO companies? It is just the purpose of the essay.Drawing on the idea of mechanism design theory, and using of the framework of the agency relationship under asymmetric information, the essay focuses on the principal-agent relationship among the company to be listed, sponsors, and regulators. By solving the the social optimum efficiency target function with participation incentive compatibility constraints, we got the balanced quality of information disclosure of the company to be listed in the specified mechanism. And then by comparing the balanced quality of information disclosure of the company to be listed in different mechanisms, we valued the effect of the various mechanisms. Then we used the empirical analysis method, testing the extent of which the sponsor system can improve the quality of IPO companies’ information disclosure, and further analysis of the persistence. The essay found that the degree of influence of the sponsor system on the quality of information disclosure is not stable from year to year, so then an empirical test of the mechanism of action of the mechanism of the reputation of the sponsor was introduced. The test found that the Sponsor reputation mechanisms in China is not yet play a strong role in stock market, and the operating capacity of the sponsor is still a major factor of the operating results. The reputation cannot be an effective constraint of the quality of information disclosure of the sponsor of the IPO project.Finally, based on the theoretical conclusions and empirical results, the essay proposed the policy suggestions on strengthening the influence of the sponsor system on the quality of information, such as comprehensively improve the regulatory capacity and enhance investor education.