Quality of Financial Information Disclosure and Efficiency of Resource Allocation Under Dual-Track System: Empirical Evidence of Registration System Reform in China

Abstract

ABSTRACT This study examined the listed companies in China’s National Equities Exchange and Quotations (NEEQ) from 2014 to 2021 to investigate the influence of the financial disclosure quality of IPO companies on the speed of passing in different systems of registration and approval from the perspective of resource allocation efficiency. In the trial registration system, high-quality financial disclosure was found to significantly improve IPO enterprises’ speed of passing, while venture capital and its characteristic variables enhanced the relationship between the financial disclosure quality and speed of passing; Distinguishing between regional marketability and firm characteristics attributes reveals that the contribution of venture capital to the relationship between financial disclosure quality and speed of passing is more pronounced in the sample of firms in low marketability regions, high technology, and smaller size. In addition, further research shows that the enterprises with high financial disclosure quality in the registration system sample have higher long-term excess returns after listing. Finally, the conclusion is still robust after using the generalized tendency matching score (GPSM) and instrumental variable method (IV) to eliminate endogenous interference. The conclusion provides empirical support and a theoretical basis for reforming the registration and issuance system in emerging market countries.