The timeliness and consequences of disseminating public information by regulators

Michael Firth, Oliver Meng Rui and Xi Wu

Journal of Accounting and Public Policy, 2009, vol. 28, issue 2, pages 118-132

Abstract: This paper documents different timeliness in disseminating sanction and enforcement information (SEI) by two types of regulatory agencies in China and the different consequences that flow from them. The China Securities Regulatory Commission (CSRC) does not make timely public disclosures of SEI and, instead, leaves it up to the firms to make a public announcement under their general obligation to disclose price-sensitive information. The firms therefore have considerable discretion in deciding whether and when to disclose SEI. In contrast, the stock exchanges in Shenzhen and Shanghai make SEI public promptly through the media and the exchanges' official websites. Using Chinese SEI data during the period 1999-2005, we find that the CSRC approach is associated with significantly lagged corporate disclosure (compared with the timely stock exchange approach) and a significantly negative (but delayed) stock price reaction. We also show that the sanctioned firm may take advantage of the less timely CSRC approach to delay its disclosure of SEI for opportunistic reasons such as completing material transactions. We conclude that the CSRC should make immediate public announcements of SEI as these contain price-sensitive information. Furthermore, the immediate dissemination of SEI will bring the CSRC into line with the disclosure practices of China's stock exchanges and international market regulators.

Keywords: Sanction; and; enforcement; information; Regulation; of; disclosure; Market; reaction (search for similar items in EconPapers)
Date: 2009

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6VBG ... 64ea871c1aaa98367f64
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:jappol:v:28:y:2009:i:2:p:118-132

Access Statistics for this article

Journal of Accounting and Public Policy is edited by L. A. Gordon

More articles in Journal of Accounting and Public Policy from Elsevier
Series data maintained by Heidi Boesdal ().