Impact of information disclosure ratings on investment efficiency: evidence from China

Chang-Chih Chen (), Kung-Cheng Ho (), Hui-Min Li () and Min-Teh Yu ()
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Chang-Chih Chen: Providence University
Kung-Cheng Ho: Guangdong University of Finance and Economics
Hui-Min Li: Henan Finance University

Review of Quantitative Finance and Accounting, 2023, vol. 60, issue 2, No 3, 500 pages

Abstract: Abstract This study examines the impact of Shenzhen Stock Exchange’s (SZSE) information disclosure ratings on investment efficiency in China. Based on a sample of Chinese A-share listed companies on the SZSE from 2001 to 2018, we discover that superior information disclosure ratings improve investment efficiency after controlling for various firm- and industry-level variables. Our findings remain valid after various robustness tests and using instrumental variables to address the endogeneity problem. Specifically, we find that improving information disclosure ratings help firms attract more investor attention, which leads to higher investment efficiency. In addition, this information disclosure effect is more pronounced for underinvestment firms and firms on the main board than for smaller firms on SEM (small- and medium-sized enterprise) and GEM (growth enterprise market) boards. Our evidence supports the idea that regulatory activities for information disclosure ratings of companies listed on China’s stock exchanges improve investment efficiency.

Keywords: Information disclosure ratings; Investment efficiency; Investor attention; Main board; Agency problems; Information asymmetry (search for similar items in EconPapers)
JEL-codes: G32 G38 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11156-022-01101-8

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