Earnings Announcement And Information Asymmetry

Due to differences of information channels between institutions and individual investors,and listed companies often deliberately block bad news,information asymmetry may be larger before negative earnings surprises among investors.This thesis uses the listed companies of Shanghai and Shenzhen Stock Exchange from 2006 to 2015 as the sample to study information asymmetry around the announcements of positive and negative earnings surprises.The study find that the degree of information asymmetry between different investors before negative earnings surprises are larger than that of positive earnings surprises.Specifically,firstly,the indicators that represent information asymmetry are significantly different between positive and negative earnings surprises,the degree of information asymmetry of negative earnings surprises is higher;Secondly,stock prices and trading volumes show different changes around the announcements of positive and negative earnings surprises.Stock prices of positive earnings surprises rise significantly before announcements,while stock prices of negative earnings surprises fall on the date of the earnings announcements.Besides,trading volumes before negative earnings increase less than that of positive earnings surprises,indicating that information asymmetry before negative earnings surprises is higher.In order to protect the interests of individual investors and promote the transparency of China's securities market,this thesis argues that regulators should strengthen the regulation of the timeliness,authenticity and completeness of the disclosure of earnings announcements of listed companies.In addition,securities research institutions should vigorously regulate research system to enhance the effectiveness of securities analysts' prediction.These are useful for individual investors to make reasonable investment decisions,and decrease information asymmetry among different investors.