Research On The Effectiveness Of The Medium And Small Investors’ Protection Under The Mandatory Information Disclosure System

No matter the "Sarbanes Oxley Act" which America promulgated in2002, or the "basic norms of internal control" and its supporting guidelineswhich China has actualized in2011, both of them marked the internalcontrol information disclosure changed from voluntary tomandatory stage. The fundamental purpose is to reduce the informationasymmetry between listing Corporation and investors, also to reduce the costof investors’searching information through the disclosure of internal controlinformation, so that can protect small investors better. But when we reducedthe information asymmetry, at the same time it also increased the cost ofthe investors’ screening information to identify in the so many good and badinformation. So how the internal control disclosure system effect on investors’protection, it also need practice test.In order to investigate which stage between the voluntary andcompulsory stage is more conducive to the protection of investors in China, atfirst the article based on the the oretical analysis to summarise the advantagesand disadvantages of the two systems, which make the foundation of gametheory analysis; In second established a dynamic game model of incompleteinformation on the corporation and investors who are the mostimportant player for the game object in the securities market. And thencalculate the refined Bias Nash equilibrium under the two stage consideringthe interaction between the listing corporation and investors,and alsocombining the information asymmetry theory and signalling theory based on capital market hypothesis theory. We discovered that the mechanisms of listingcorporation and investors affect each other by comparing theequilibrium factors and the equilibrium probability of listing corporation falsedisclosure and the equilibrium probability that investors choose to invest andinvestors‘equilibrium investment profit in two stage. We can conclued: theinvestors has the greater the possibility to invest under the Mandatorydisclosure system, and if increase the listing corporation the falsedisclosure cost and reduce investors’ cost on information searching andscreening, the internal control disclosure system has more effective protectionfor small investors. At last, considering the conclusion the article puts forwardsuggestions from the two aspects between listing corporation and investors toprotect the interests of investors more effectively.