Research On The Effectiveness Of Disciplinary Sanctions To Listing Corporations

The efficiency and effect of administrative supervision andmanagement of the securities market in China has been criticized all thetime. Violations of Listing Corporation still happen despite repeatedprohibition. Violations seriously damage the interests of investors andhinder the sound development of the securities market. Disciplinaryactions are direct manifestations of administrative supervision, and itseffectiveness reflects the significant degree of operation of the securitiesmarket. Therefore, a series of theoretical and empirical researches on theeffectiveness of disciplinary sanction have been carried out by bothdomestic scholars and foreign scholars. Based on the summary of relevantliterature both at home and abroad, the thesis first uses descruotuve statustatistical method to analyze the current situation of disciplinary actions inourcountry’ssecurities market, and the results showthatthepunishment isrelatively light, inefficient, and faulty. Secondly, the thesis uses the eventstudy method to examine the market reaction and the influence on loanfinancing caused by disciplinary sanctions, and the samples are disciplinary sanctions made by China Securities Regulatory Commission,Shanghai Stock Exchange Institute and Shenzhen Stock Exchange Institutefrom2010to the first half year of2013. The empirical analysis shows thaton the third and fourth trading days after the announcement of thedisciplinary actions, the cumulative abnormal returns of the stock price aresignificantly negative. Due to response lag and short duration, the thesiscomes to the conclusion that the effectiveness of disciplinary actions isweak in the overall level from the market reaction dimension. Furthermore,the negative reaction degree is positive correlated with the authority ofregulators and the intensity of disciplinary sanctions, and it is not sensitiveto violators and violating types except insider trading. From empiricalresults, the disciplinary actions are shown to bring obvious negativeinfluence on the total amount of loans and the proportion of the unsecuredloans. The thesis comes to the conclusion that the effectiveness ofdisciplinary actions is relatively stronger from the influence on loanfinancing dimension. Finally, these findings present an additional evidencefor the relationship between violations and economic performance andhelp build better regulatory policy for regulators.