Can Regulatory Inquiries Improve The Quality Of Accounting Information?

In the modern financial system,the capital market is an important part of it.It can promote the effective allocation of idle resources in the society and is an important place for companies to raise funds and investors.Former Chairman of the China Securities Regulatory Commission Xiao Gang said:"Stock is a fictitious economy.It differs from the general merchandise price formation mechanism.However,if the stock price is too large to separate from the company value,it is a bubble." How to ensure that the stock price will not To leave the company's value too much is an important issue before the regulators.In China's current capital market supervision system,government supervision is still in a dominant position.However,government supervision cannot respond to changes in the market in a timely and accurate manner.Exchanges can promptly and effectively disclose information to listed companies through regulatory inquiries.Supervision is more conducive to the long-term development of the capital market and protects investors' access to the information needed for decision-making.While the capital market provides facilities for enterprises and investors,huge interests have also tempted enterprises to use fraudulent means such as financial fraud.Taking China's capital market as an example,since the date of its establishment,there have been companies that have been taking risks to seek profits through financial fraud.There are mainly two types of financial frauds:one is that companies use the counterfeiting materials in IPOs,and the other is that listed companies make false statements in their regularly disclosed reports in order to manipulate the stock price.According to statistics,China ' s A-share listed companies have made more than 50 cases of fraud in regular reports.In 2017,LeTV company exaggerated profits,falsely reported sales,and fraudulent financial data damaged the interests of many investors.The capital market information disclosure system requires listed companies to ensure that the disclosed information is true,accurate,and complete,and discloses to investors the information necessary for making decisions.Recently,China began to reform the“registration system" of securities issuance.The exchanges began to change their supervision methods and gradually changed to the supervision centered on information disclosure.Investors and regulators are concerned about whether the existing information disclosure system can ensure listed companies to disclose relevant information in a timely,accurate and complete manner.In order to ensure the orderly operation of the capital market,the information disclosure system requires listed companies to disclose relevant information in a true,accurate,and complete manner.Recently,China began to reform the "registration system " of securities issuance.The exchanges began to change their supervision methods and gradually changed to the supervision centered on information disclosure.Under the current information disclosure system,the information disclosed by listed companies is true,accurate and complete,and has always been concerned by the regulatory authorities and investors.In this context,the Shanghai Stock Exchange and the Shenzhen Stock Exchange have established a mechanism for periodical report inquiries to address the irregularities or errors in the disclosure of information in the periodic reports of listed companies and give play to the first line of their capital market supervision.The role.The stock exchange issues periodic reports issued by listed companies,asking investors the information they need to issue a letter of inquiry to listed companies asking them to explain,supplement or correct the listed issues.After the Exchange receives a reply from the listed company about the inquiry letter,the Exchange will send a letter of inquiry and a business reply to the Exchange website,disclosing the relevant information to the investor.For enterprises that fail to respond or make a reply that can not meet the requirements of the truth,accuracy and completeness of the information disclosure system,the Exchange will send a second letter or request a specific response to a question.From the role of the periodic report inquiry letter,the regular report inquiry letter not only allows enterprises to disclose more information or correct wrong information opportunities,but also allow investors to grasp more about the investment of listed companies to protect the investment The interests of the public,but also improve the level of information disclosure of listed companies.Different from the past exchanges' supervision of listed companies'“behaviors”,that is,issuing inquiries to company mergers and acquisitions,major events,etc.,periodical inquiries are more focused on the supervision of information disclosed by listed companies.The periodical report inquiries have given related listed companies an opportunity for additional disclosure and can disclose more relevant information to investors and provide corresponding explanations to the questions raised by the supervisors.This will undoubtedly improve the quality of information disclosed by listed companies.In the capital market,the quality of accounting information is an important indicator to measure a company's level of information disclosure.Transparent and complete information enables investors to understand the actual operating level and financial status of listed companies and make correct decisions.Providing high-quality accounting information is the responsibility of the company.If there is a problem with the quality of the accounting information provided by the company,it will damage the interests of investors and cause great impact on the distribution of resources in the capital market.This article uses the inquiry letter of the regular report disclosed by the exchange as evidence to empirically analyze whether the exchange's supervision inquiries can effectively improve the quality of the listed company's accounting information.This article selects listed companies that received periodical inquiries from the Shenzhen Stock Exchange and the Shanghai Stock Exchange 2015-2016 to receive periodical report inquiries.Through empirical tests,we have obtained a regular report inquiry mechanism from the China Exchange.Improve the quality of listed companies'accounting information.The research conclusions of this article will become an important basis for the transition from the exchange to the supervision centered on information disclosure.It will provide suggestions for the Exchange to improve its supervision methods,improve the effectiveness of its supervision and inquiries,and maintain the orderly operation of the capital market.Protect the interests of investors.