Business Strategic Change And Text Information Disclosure Strategy

In capital market,the publicly disclosured information by listed company is the main information source of the decision-making by investors,which includes numeric information and text information.The financial information,which takes numeric information at the core displays the previous business performance of enterprise,which is the basic data source for the analysis;while the most of the text information is non-financial information,which is the supplementary carrier of the financial information of enterprise,it can better show the future operation trend,so that the function of it has been greatly focused by people.As the decision maker of the information disclosure of the company,the management later decides the content and words and expressions of the information disclosure in the annual report,under some motivation,it may use obsure or hollow word skills to control these linguistic text information to hind the negative information,and then it can influence the interpretation of the market.Mostly,strategic change is accompanied with operational risk and information risk.On one hand,strategic change means that enterprise should have new challenge,so that the uncertainty of the operation will be improved;the new management model mostly will require higher cost for change,and break the previous organizational inertia,which means that it may have large change resistance;however,limited by organizational learning ability and resources of the enterprise,the success rate of change is not high,all these elements will finally lead increasing operating risk of the enterprise,the performance of the enterprise will have large fluctuation,so that the management layer may manipulate the annual report forced by the pressure of performance.On the other hand,stragetic change involves relocation of resources,during the period for change,the right of management layer will be larger,so that they may have self-serving behavior taking this opportunity.At the same time,the business of strategic change and the complexity of environment will bring opportunity for fraud andexcuse for explanation for management layer,so that they can rationalize their self-serving behavior in annual report;In other word,under the background of strategic change,enterprise and management layer may have motivation and opportunity to have necessary�transaction�on the information in annual report,especially the text information not subject to criteria.In this paper,by means of the revelation on the theoretical relation between strategic change and annual report readability,it can empirically check the influence of stragetic change on annual report readability,so that it can further provide powerful evidence for regulating the related law and rules of information disclosure.In this paper,on the basis of the definition on annual report readability and strategic change,with the related theories,including impression management theory,principal-agent theory,information asymmetry theory,and information transition theory,it has theoretical analysis on the relation of business stragetic change and annual report readability,and puts forward hypothesis;on the basis of it,it has analysis on four regulatory effects from incentive mechanism and supervisory mechanism on the influencing factor of them.From the result,we can see that firstly,the business strategic change and annual report readability have negative correlation,which means that the greater for the strategic change is,the weaker for the annual report readability is.Secondly,the salary of management layer will greatly relieve the influence of strategic change on the annual report readability,which means that with other conditions unchanged,the higher the salary of management layer is,the less influence of the strategic change to annual report readability is.Thirdly,share holding of management layer can greatly relief the influence of strategic change to annual report readability,which means that with other conditions unchanged,the higher for the share holding by management layer is,the less influence of the strategic change to annual report readability is.fourthly,internal control can obviously relief the influence of strategic change to annual report readability,which means that with other conditions unchanged,the higher for the quality control by enterprise is,the less influence of the strategic change to annual report readability is.Fifthly,external audit can obviously relief the influence of strategic change to annual report readability,which means that with other conditions unchanged,if the listed company employsBig Four as audit institution,it can relief the influence of strategic change to annual report readability.Finally,on the basis of the above results,it puts forward related advice that it should improve the disclosure content of annual report,establish disclosure governance mechanism of annual report,display the incentive method of management layer,and complete inner control system.