An Analysis Of The Impact Of Illegal Information Disclosure On Corporate Financing

Information disclosure,which is the core value of public principle in the capital market,is the main channel of communication between listed companies and relevant stakeholders.It is through those regular and irregular disclosures that investors get to understand the overall picture concerning the investee's operating results and financial position to support their economic decisions.The information is of value only if it is accurate,effective and comprehensive.However,as China's economy and society making the transition to the new normal,we are still witnessing Chinese listed companies' illegal information disclosures which may threat the stabilization and healthy development of Chinese stock market.And even prestigious brands can be found on the punishment announcement.For external stakeholders,illegal disclosures further escalate the extent of information asymmetry between listed companies,investors and debtors,exposing stakeholders' interests under greater danger.For companies themselves,violations may bring exceptional profits in the short term,however those profits are gained at the cost of larger long-term benefits and sustainability.For the capital market as a whole,unconventional information can severely distract the market from efficient resource allocation,blocking the development of a more harmonious,fair and effective environment.In view of the negative impacts of illegal information disclosure on capital market,researchers from both the theoretical and practical fields have already carried forward massive quantities of studies concerning the issue.However,at present,the academic researched on the topic are mainly limited to the following three aspects : the motivations,relevant factors as well as the market response to illegal information disclosure.As a matter of fact,the existing studies rarely cover the discussion of the relationship between illegal disclosure and corporate finance,let alone the relationship between illegal disclosure and the cost of debt financing.On the basis of combing the current research results and theories,this paper argues that the announcement and punishment by China Securities Regulatory Commission and stock exchange directing at listed companies' illegal information disclosure would deliver a negative signal to the capital market,and thus causing doubt among relevant stakeholders regarding the quality of accounting information.The influence of illegal information disclosure varies between company's stock holders and creditors for various reasons.On one hand,typical debtors like banks are more capable than average stockholders when it comes to data collecting,comprehending and analyzing.On the other hand,debtors' future interests are more secure under the compulsory implementation of lending contracts.In that case,illegal disclosure might affect the means and channels of future corporate financing.In the meantime,as the embodiment of the quality of accounting information,illegal disclosure might also have an impact on corporate financing costs.The paper finds out that even though the costs of debts shall increase significantly in response to illegal information disclosure,listed company still tend to choose debt instead of equity as the channel of its re-financing.The follows are the main content of this paper:Chapter one is the introduction by introducing the main topic of the paper accompanied by the background,purposes and meaning of the research.The contents,traits of thoughts and critical framework are also discussed in this part of the passage.The chapter is ended by clarifying the contributions and weakness of the study.Chapter two is the literature review.Through the consult of massive literature materials from home and abroad,the paper figures out the current acknowledgement about the motivation,triggering factors and market response towards illegal information disclosure.In chapter three,the paper summarizes relevant theories regarding the relationship between illegal information disclosure and corporate financing which involve the basic corporate financing concepts like decision-making usefulness,information asymmetry and principal agent theory.The theoretical analysis and hypothesis are brought up in chapter four.The fifth chapter covers the empirical study of the influence of illegal information disclosure on corporate financing.The empirical study includes the selection of data,descriptive statistics of variables,construction of regression model,regression analysis as well as the additional and robustness test.The relationship between illegal information disclosure and the means of corporate financing,the relationship between illegal information disclosure and the costs of debts are discussed at the end of the chapter in the light of empirical results.The last chapter consists of the study conclusions and policy suggestions.It also comes up with the limitations,directions and prospects of future academic research.