Information disclosure as a means of minimizing asymmetric financial reporting: The role of market reaction

Kung-Cheng Ho, Renji Sun, Lei Yang and Hui-Min Li

Economic Analysis and Policy, 2023, vol. 78, issue C, 1221-1240

Abstract: This study investigates the effect of information disclosure on financial accounting information comparability. We use a sample of Chinese A-share companies listed from 2001 to 2018 and discover that higher information disclosure quality can increase financial accounting information comparability. Our results reveal that high information disclosure ratings attract greater investor and analyst interest than does increased liquidity and that increased financial accounting information comparability is the main transmission pathway for this effect. Furthermore, the results remain robust after instrumental variables are used to solve endogeneity problems and also after robustness tests. Our findings suggest that regulatory activity to improve public firms’ information disclosure in the Chinese stock market can increase the market’s efficiency. In addition, when facing agency problems, enterprises should defer to external supervision and governance from investors.

Keywords: Information disclosure; Comparability of financial accounting information; Investorprotection; Investor attention; Stock liquidity (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:1221-1240

DOI: 10.1016/j.eap.2023.04.022

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