Study On The Relationship Between Institutional Investors’ Shareholdings And The Readability Of Annual Reports Of Chinese Listed Companies

Publicly disclosed information of listed companies is the most direct way for stakeholders to obtain the results of management operation and governance status of listed companies.And in the process of information disclosure by listed companies,investors often use a company’s annual report to understand the most basic operating conditions of the enterprise.Company annual report is an important information carrier in the securities market and is the main basis for market participants to make strategic judgments.As an important medium for investors and creditors and other stakeholders to draw information,the quality of information disclosure in the annual report is an important indicator to judge the company management’s operating ability,which is relevant to investors and other stakeholders,and the information disclosure in the annual report must be timely and accurate.However,the quality of disclosure of annual reports of listed companies has been criticized for years due to weak investor protection and imperfect corporate governance in the Chinese capital market.It can be seen that how to improve the quality of annual report disclosure has become a very urgent and important issue.With the continuous development and improvement of the capital market,information disclosure is now not only limited to the discussion of financial information.For example,the quality of disclosure of the board of directors’ report,which is one of the important non-financial information disclosure tools,is directly related to the trust of the stakeholders.And readability,as one of the measurement dimensions of the quality of non-financial information disclosure,has come into view.The government has made various statements on liberalizing and promoting the development of institutional investors in the domestic capital market,and seizing this opportunity,institutional investor shareholdings have been growing in China.As an external witness of the quality of information disclosure in listed companies’ annual reports,independent third-party institutional investors have gained a seat in the board of directors by virtue of their high shareholdings,which play a supervisory and disciplinary role in the quality of information disclosed by companies to the public and influence the effective processing of information and allocation of resources in the capital market.This leads to the research topic of this paper:What is the relationship between institutional investors’shareholding and the readability of annual reports?Does the relationship between institutional investors’ shareholding and the readability of annual reports differ significantly under the moderating effects of different property rights and external audit quality?This paper empirically investigates the relationship between institutional investors’ shareholdings and annual report readability based on a two-way relationship perspective for the current situation of the flourishing development of institutional investors in China,based on combing the literature and analyzing the content,and using the empirical research method,using A-share main board listed companies in Shanghai and Shenzhen from 2011 to 2020 as a sample.The study finds that:(1)the relationship between institutional investors’ shareholding and annual report readability is a causal two-way relationship;(2)the effect of annual report readability on institutional investors’ shareholding exhibits a "time lag";(3)the causal relationship between the two exhibits significant differences under the effect of different property rights and external audit quality regulation.