Research On The Market Reaction To The Performance Preannouncement Information From Listed Companies

The principal agent theory is the cornerstone of modern corporation governance structure. In the principal-agent relationship, management and investors have serious asymmetric information problems. In order to reduce the information asymmetry between investors and management level, and release the performance risk of annual report in advance, China’s Securities Regulatory Commission began offering performance preannouncement system from 1998. The performance preannouncement system is equivalent to disclosure the earnings information in the annual report at twice. Theoretically speaking, the design of such a system is helpful to improve the securities market information transparency, and guarantee the investors’ know right. So, whether the listed companies disclosure of performance preannouncement have information content? How is the quality of the performance preannouncement information? Is the performance preannouncement information decision-making useful for investors? What are the problems exist in China’s performance preannouncement information disclosure system? Therefore, the research on the market reaction to performance preannouncement information has very important practical significance. It’s not only helpful to judge the information content of the performance preannouncement information, but also helpful to regulators understand performance preannouncement information’s impact on the market, and it also can provide a reference for improving performance preannouncement disclosure system.In this paper, in Shanghai and Shenzhen Stock Exchange 1247 listed companies as the effective samples, effcctive samples’ 2013 performance preannouncement information as the research object. This paper use event study method to research the stocks’ MAR and MCAR on the disclosure date after 20 trading days, in order to judge the degree of market reaction on the performance preannouncement information. The study found that China listed companies’ performance preannouncement information is given priority to with "good news" and "accurate" category, the proportion of the total number of performance preannouncement information respectively 61.5% and 72.73%. Overall, Chinese listed companies’ business performance is good, and the accuracy rate performance preannouncement information is higher, and most of performance preannouncement information from listed companies is credible.Through empirical study found that, on the disclosure date, the stocks’ MAR and MCAR have significant changes. This shows that the performance preannouncement has information content and has an impact on the decisions of investors. The market can make positive reaction to the "good news" and "accurate" information advance 1 trading days; the market can make negative reaction to the "bad news" and "non-accurate class" information advance 4 trading days; the market can make reaction to the performance preannouncement information in advance. It shows that there exists a situation of information leakage before the event day. This information leak caused the market having a large number of arbitrage opportunities and insider trading. The market can completely reflect the performance preannouncement information in 3-6 days. This shows that our securities market has not yet reached the semi strong effeciency.Through this study also found that, China’s performance preannouncement information disclosure system is not perfect. The enthusiasm of disclosing performance preannouncement information of listed corporation is not high. The responsibility consciousness of management’s information disclosure is not strong. The content of performance preannouncement information disclosure is too simple. The regulator’s supervision degree for performance preannouncement information is weak. Part of the listed companies performance forecast accuracy of information needs to be improved. To solve these problems, we need to fundamentally improve China’s listed companies’performance disclosure system. For listed corporation, need to change the concept of disclosing preannouncement information, to disclosure performance preannouncement information voluntarily, The listed corporation need to strengthen the internal control to performance preannouncement information disclosure, and pay more attention on the professional training of prediction staff, to improve the accuracy of performance preannouncement information. For the regulatory agencies, first of all, increase the performance preannouncement information and regulate the information disclosure. The regulator should publish <the information disclosure content and format standers for listed companies-performance preannouncement> as soon as possible. To establish the civil responsibility system of performance preannouncement information disclosure, strengthening the management’s responsibility consciousness of information disclosure. To strengthen supervision on the "bad news" and "non-accurate" information, adhere to the "post supervision mainly, supplemented by the principle of prior supervision" and establishing "non-accurate" negative list information. To further improve the accuracy of performance preannouncement information. Finally, severely punish the insider trading behavior, and maintain the stable and healthy development of securities market.