A Study Of The Impact Of Managerial Power On The Information Disclosure Quality

The information disclosure system, which aims to ease the information asymmetry, allows investors, creditors and other stakeholders to have an object understanding of the business results and their financial situation. The information disclosure quality of the listed company has a great impact on the effectiveness of the security market. It also affects the efficiency of resource allocation. In general, high information disclosure quality strengthens the confidence of investors, leads a healthy development of the capital market.There are many factors affecting the information disclosure quality. For example, the financial situation of the company, the scale of assets, legal supervision and the structure of the internal corporate governance. But the previous researches have overlooked the role played by the managerial power. Berle A. Adolf and Means Gardiner once pointed out that "with the transfer of the companies’ control rights, management is in charge of the real information, and their motivation and behavior will affect the information disclosure quality, to a certain extent." Being an emerging capital market of a transitional economy, China has a special system. In China, managerial control and too much power of internal people are the basic characteristics of most enterprises. Although the adequate information disclosure is the main way to solve the agency problem, the quality of information disclosure may also be difficult to be effective due to "internal power" and "insider Rent-seeking".Based upon these viewpoints, we want to explore the impact of managerial power on the information disclosure quality. In the study, we use the Shenzhen stock exchange’s information disclosure rating result as the substitute variable of information disclosure quality. And we choose the managerial structural power, the ownership power and the reputation power as the explanatory variables. The main frame of the thesis is as follows:The first part is the introduction. This part mainly explains the background of this paper and the value of this research, it also introduces the research mentality and the content, proposes the research method and the innovation. The second part is literature review. The part reviews the relevant literature about information disclosure quality and management rights. It shows different points about this topic and points out their contributions and shortcomings. In this part, we define what the information disclosure system is and how to measure the quality of information disclosure. Then this paper reviews the theory of management rights, focuses on the literature talking about the relation between managerial power and the quality of information disclosure.The third part is the theoretical analysis and assumptions. This part provides the theory support:they are principal agent theory, information asymmetry theory, scientific behavior theory and upper echelon theory. Then the paper puts forward the research hypothesis respectively from the managements’structural rights, ownership rights and reputation rights.The fourth part is research design.In this part, we construct an empirical model, explain sample data and list variables in the model. The sample firms we choose are those in the Shenzhen stock exchange.The period lasts from2010to2013. In the processing of the dependent variable, we assign A and B the number1,assign C and D the number0. We use management dulity to measure the structural power; use shareholding ownership to measure the executives power; use the management tenure to measure the prestige power.Taking into account that the explanatory variables includes two components, we choose the logistic model.The fifth part is empirical test. This part includes the descriptive statistics, correlation analysis and logistic regression, to find out the impact of management power on the quality of information disclosure. The result shows that the structural power is negatively related to the quality, property right is positively related to the information disclosure quality but the prestige power has no significant effect on the information disclosure.The sixth part is the conclusion of the study and my suggestions. In this part, we summarize the conclusions and put forward some suggestions,analyse the research limitations and point out the future improvement.It is still a new topic for us to study the impact of managerial power on the information disclosure quality. In this paper, not only do we consider the characteristics of the company, but also the managerial power.In the paper, we consider the self motivation and provide some useful information to the futher research.