The Impact Of Short Selling Mechanism On Strategic Textual Disclosure

Information disclosure of listed companies is crucial for investors to make value judgments and investment decisions,and annual reports,as the main carrier of information conveyed by listed companies to the outside world,occupy a central position in information disclosure.Annual report information is mainly composed of standardized financial information and non-standardized textual information,which together reflect the operation status and development prospect of enterprises.Among them,non-standardized textual information accounts for a larger proportion of the annual report,and in this high context communication environment in China,it usually has a rich connotation that cannot be reflected by digital information,so investors not only pay attention to financial numerical information disclosure,but also the tone of textual information disclosure has become the key object of investors’ attention.However,in recent years,there have been incidents of "face changes" in annual reports,which means that the tone of annual reports may have become a covert means of information manipulation.Therefore,while paying attention to the tone of the textual information disclosure,it is necessary to study what factors affect the textual information disclosure of companies.As a major institutional innovation in China’s capital market,the short-selling system has changed the long-term unilateral market pattern of buying up but not buying down in China’s stock trading.Short-selling traders have strong information acquisition and analysis capabilities,which can deter stock price declines and make the expected default cost of information manipulation by company managers rise.Based on this,this thesis firstly compares and summarizes domestic and foreign literature,combines information asymmetry theory,signaling theory and principal-agent theory,analyzes management impression management behavior,and leads to the hypothesis of this thesis accordingly.Secondly,the annual reports disclosed by A-share listed companies from 2007 to 2020 are selected as the research sample,and the impact of short selling mechanism on the strategic textual information disclosure of annual reports is investigated from the perspective of annual report tone management using a difference-in-differences double model,and internal control and analyst attention are introduced as moderating variables to explore the governance role of short selling mechanism in different We also investigate the differences in the governance role of short selling mechanism among companies from the perspective of internal and external governance environment and introduce internal control and analyst attention as moderating variables.Finally,we propose some recommendations in light of the empirical findings of this thesis and the current situation of China’s financing and financing business development.Through the empirical analysis,the main conclusions obtained in this thesis are as follows:(1)The positive degree of annual report tone decreases after a company becomes a short sale target.(2)The higher the quality of internal control,the more pronounced the inhibitory effect of short selling mechanism on annual report tone.High-quality internal controls enhance corporate performance,reduce management’s incentive to make strategic disclosures,and create checks and balances and oversight on management.(3)The higher the level of analyst attention,the more pronounced the inhibiting effect of short selling mechanism on the tone of annual reports.Analysts can play an external monitoring role to restrain management’s opportunistic behavior and improve the quality of information disclosure.In addition,further research finds that the short selling mechanism is also negatively correlated with the abnormally positive tone of the annual report using fundamental company data to isolate it from the tone of the annual report.This suggests that the short selling mechanism can suppress the tone management behavior of management and improve the quality of annual report disclosure.This thesis explores the impact of textual information disclosure of annual reports from the external market mechanism of short selling of securities,which enriches the research on the influencing factors of textual information disclosure and the impact of short selling mechanism on corporate governance,and provides theoretical support for companies to continue to improve information disclosure and deepen the reform of financial system.