Annual Report Inquiry Letter Supervision,Comparability Of Accounting Information And Financing Constraints

The Shanghai Stock Exchange and the Shenzhen Stock Exchange are the main institutions for strengthening the interim and ex post regulation in China.In view of the frequent hot events of listed companies in China,the Shanghai Stock Exchange and the Shenzhen Stock Exchange shall actively promote the system reform,coordinate the regulatory efficiency and regulatory quality,establish and constantly improve the inquiry system in line with China’s regulatory model,and further promote the improvement of the quality of listed companies,so as to improve the regulatory efficiency.Thus,the non-punitive regulatory system has gradually become a new trend of regulatory reform,and regulatory efforts are also being strengthened.As an important measure for the supervision of stock exchanges,the proportion of enquiry letters for annual reports has increased year by year,and more attention has been paid to relevant issues.What role it plays in the supervision of listed companies is worthy of attention and in-depth discussion.From the perspective of non-punitive regulation,this paper uses the data of annual report inquiry letter published by Shanghai Stock Exchange and Shenzhen Stock Exchange from 2015 to 2020 to empirically test the impact of annual report inquiry letter regulation on financing constraints,and explores the possible impact paths.Meanwhile,it shall subdivide the characteristics of the inquiry letters received by the enterprise in the current year and the characteristics of the replies thereto,and explore the impact of the receipt of annual report inquiry letter,the number of questions contained in the first inquiry letter that year,and whether to delay the reply letter on financing constraints.Then,to make a thorough inquiry into the influence of comparability of accounting information on financing constraints,and the influence of it on the relationship between annual report inquiry and financing constraints.Furthermore,the effects of equity financing costs,new bank loans,changes in commercial credit,as well as the size and heterogeneity of listed companies on the relationship between the inquiry letter and financing constraints are explored to expand the research on the influence of the supervision system of inquiry letter on the financing behaviors of listed companies.The results of the study were :(1)the regulation of inquiry letters for annual reports intensifies the extent of financing constraints faced by listed companies,and the frequency of receipt of letters,the number of issues contained therein,and deferred replies will also intensify financing constraints and cause enterprises to fall into financing difficulties;(2)Having comparable accounting information can alleviate financing constraints,and the comparability of accounting information as a moderating variable can weaken the positive correlation between annual report inquiry letters and financing constraints;(3)The inspection results of the action mechanism indicate that the inquiry letter for annual report will cause damage to the reputation of the company,increase the default risk,decrease the credit evaluation,decrease the credit evaluation of investors,and then increase the degree of financing constraint;(4)Where a company receives an enquiry letter for annual report,its equity financing costs shall be increased significantly and the amount of debt financing shall be reduced significantly;(5)The size of enterprises and the heterogeneity of property rights will have an impact on the relationship between annual report inquiry letters and financing constraints,which is more prominent among small-scale and non-state-owned enterprises.The main contribution of this dissertation are as follows:firstly,from the inquiry letter superivision of stock exchange’s point of view,exploring the impact of annual report inquiry letter on financing constraints and the exitence of possible influencing path,which is helpful to deeply understand the internal mechanism of financing constraint mitigation by annual report inquiry letter,and supplement and improve the economic consequences of the inquiry letter,a regulatory system.Secondly,this paper uses comparability of accounting information as a moderating variable to analyze the financing constraints of listed companies and how accounting policies can be used to deal with the negative impact of regulatory inquiries after companies receive inquiries from stock exchanges on annual reports,thus expanding the content of economic consequences.Thirdly,this paper further discusses the changes of equity financing,new bank loans and commercial credit after listed companies receive the inquiry letter of annual report,confirms that the supervision of inquiry letter has certain risk warning function,guides investors to avoid risks,and protects investors to make investment decisions prudently.