Corporate Information Disclosure Research Articles

ESG rating divergence, information disclosure, and stock price volatility: evidence from Chinese listed companies

ABSTRACT This study utilizes ESG rating data from nine rating agencies covering Chinese A-share listed companies from 2006 to 2022 to construct a more rational measurement of ESG rating divergence and examines its impact on stock price volatility. The results indicate that excessive ESG divergence worsens stock price volatility, but this linkage between divergence and volatility is mitigated when corporate information disclosure compliance improves.

Enhancing capital market efficiency: The role of data assets disclosure in reducing stock price synchronicity

In the burgeoning digital economy, data have emerged as a pivotal factor of production, embodying a critical source of competitive advantage and core assets for companies. This study investigates the influence of data assets disclosure on the efficiency of capital market pricing, particularly through the lens of stock price synchronicity among Shanghai and Shenzhen A-share listed companies from 2013 to 2021. The analysis reveals that transparent data assets information significantly diminishes stock price synchronicity. The reduction is more pronounced when the disclosed data assets information is highly verifiable and comprehensible. Mechanistic exploration suggests that this effect primarily arises from diminished information asymmetry, enhanced long-term investments by institutional investors, and eased financing constraints. Notably, the impact is more substantial in non-high-tech companies and those with superior information disclosure ratings. After rigorous robustness checks and endogeneity considerations, our findings persist, highlighting the critical function of data assets disclosure in reducing stock price synchronicity and offering actionable insights for refining corporate information disclosure and governance practices.

Determinants of Institutional Ownership in the MENA Region

This study explores the main determinants of institutional ownership in the MENA region. Using a large sample of 262 listed companies across MENA countries, this study focuses on company and country characteristics that might explain institutional behavior. We attempt to answer the following questions: First, what are the main categories of institutional investors operating in MENA countries? Secondly, what factors drive institutional ownership? Results reveal a weak presence of institutional investors in the MENA region. Unlike foreign and passive investors, domestic and active institutional investors dominate the companies’ ownership. Such findings raise serious issues about how to attract foreign institutional investors. Results also suggest that value stocks appeal to institutional investors, whatever their origin (foreign or domestic) and kind (active or passive). Institutional investors look for large, profitable, and liquid companies that pay high dividends. They prefer investing in highly indebted companies as they consider debt an efficient mechanism to mitigate agency problems. Corporate governance and information disclosure are also crucial determinants of institutional ownership. However, foreign-domestic and active-passive institutional investors have different investment preferences. Our study would contribute to a better understanding of ownership endogeneity within an emerging context. Results would help professionals, managers, and policymakers to adopt appropriate reforms to offer an appealing business climate and attract a large base of institutional investors, not only foreign and active investors.

Is managerial myopia detrimental to corporate ESG performance?

This study explores the nexus between managerial myopia and corporate Environmental, Social, and Governance (ESG) performance within the framework of China's A-share listed companies from 2010 to 2020. We provide a novel insight into how the temporal orientation of managerial decision-making significantly impacts ESG outcomes, highlighting the adverse effects of a short-term focus on sustainable corporate development. Using a robust dataset, we delineate the mechanisms through which managerial myopia undermines ESG performance, specifically in green innovation and corporate information disclosure quality. Further, it examines the efficacy of external governance mechanisms, such as the increased liquidity of stocks and the engagement of Big 4 accounting firms, as mitigating factors. The paper's methodology combines advanced regression analysis with propensity score matching to validate the causal relationship between managerial myopia and ESG performance, controlling for potential endogeneity and selection bias. The findings suggest that managerial myopia indeed poses a significant challenge to achieving high ESG standards, with implications for both policymakers and corporate governance practices. This study contributes to the broader discourse on corporate sustainability by linking managerial cognitive traits to ESG performance, with a specific focus on the Chinese market, thereby enriching the understanding of ESG dynamics in emerging economies.

Trust and inter-regional M&As: Evidence from China

This paper investigates the economic impact of trust on inter-region mergers and acquisitions (M&As) using a large sample of M&As in China. We find that trust distance among regions negatively predicts frequency of inter-region mergers, merger volume and synergy gains. Economic mechanism analysis shows that trust distance lowers merger gains through imposing transaction cost on the deal. The negative effects of trust distance on inter-region M&As activities and synergy gains are less pronounced when legal institution level distance between regions are smaller, consistent with trust being a substitute for formal institutions; it is less prominent when corporate governance and information disclosure level distance between regions are smaller, suggesting that trust is more important in transactions with higher information asymmetry; it is less salient when financial market development level distances between regions are smaller, consistent with trust is less important with repeated interactions between economic parties. Overall, our results highlight the role trust plays in shaping corporate decisions and economic outcomes.

Managerial overconfidence and corporate information disclosure

By extracting detailed birth information for managers of Chinese listed firms from 2011 to 2021, we developed a novel measure of overconfidence and applied it to the corporate information disclosure. Our findings demonstrated a close association between managerial overconfidence and both mandatory and voluntary disclosure behaviors exhibited by firms. Specifically, managerial overconfidence significantly contributed to an increase in accrual-based earnings management and the voluntary disclosure of Corporate Social Responsibility (CSR) information by firms. Furthermore, we observed that overconfident managers were more inclined to adopt a positive disclosure tone and tend to underestimate future risks in forward-looking information disclosure. In our additional analysis, we uncovered evidence suggesting that various factors, including corporate governance practices, the types of actual controllers, financing constraints, analyst following, and market competition, might all play a role in influencing corporate information disclosure behavior driven by managerial overconfidence. This study expands on the economic implications of the Upper Echelons Theory and offers pertinent recommendations to enhance the quality of information disclosure.

Stake of shares, Stock liquidity and Listed company information disclosure violations

In recent years, due to the rapid development of China's domestic market economy, the financing method of equity pledge has played a very important position and influence among the main financing methods of listed companies due to its strong flexibility, simple transaction method and high efficiency. Based on the panel information of A-share non-financial listed companies in Shanghai and Shenzhen from 2016 to 2022, this paper studies the impact of equity pledge of controlling shareholders on corporate information disclosure violations, and explores whether equity pledge will affect corporate information disclosure violations by affecting stock liquidity. The results show that the equity pledge of the controlling shareholder will significantly improve the liquidity of stocks, thereby aggravating the company's information disclosure violations, and the stock liquidity will enhance the inducing effect of equity pledge on the company's information disclosure violations. Moreover, in non-state-owned enterprises, the impact of equity pledge of controlling shareholders on corporate information disclosure violations is more significant.

The closer the better: Supplier geographic proximity and corporate information disclosure violation

This study examines the association between supplier geographic proximity and corporate information disclosure violation. Using panel data with 13,775 firm-year observations of listed firms in China, we find that a supplier geographically closer to a firm (geographic proximity) can suppress the firm's information disclosure violation. This relationship is more pronounced when the supplier provides more specific investments and the firm is a non-state-owned enterprise. The main finding holds after using various measures to address endogeneity, including propensity scorematching and instrumental variable method. Overall, our research suggests the supplier's governance effect on a firm’s information disclosure strategy.

Multiple large shareholders and abnormal stock trading halts

ABSTRACT Using a sample of Chinese A-share listed firms on Shanghai and Shenzhen stock exchanges from year 2003–2019, this paper examines the impact of multiple large shareholders (MLS) on abnormal stock trading halts. The results reveal that listed companies with MLS have a lower probability of abnormal stock trading halts. When the number and share percentage of non-controlling shareholders increase, their inhibitory effect on arbitrary stock trading halts is more significant. Channel tests suggest that MLS can restrain abnormal stock trading halts by reducing the tunnelling activities by controlling shareholders, increasing the proportion of dissenting votes on corporate board, and improving corporate information disclosure quality. The impact of MLS on abnormal stock trading halts is more pronounced in firms with lower quality of internal control and information transparency.

Human Capital Disclosure: A Review Article

This article aims to provide deep insight towards the basic understanding of intellectual capital disclosure specifically from the perspective of human capital disclosure. This study reviews the article and primarily focuses on a systematic review of past studies on human capital disclosure. There is a perception among potential investors that intellectual capital information shared by corporate companies is diverse in characteristics. In many developing economies, the government heavily influences corporate culture companies to abide by accounting and corporate practices in the modern world. However, from the investor perspective, the intellectual capital information tends to be net investee; therefore, their emphasis is mostly on corporate information supply. This article summarizes corporate information disclosure and provides the connection between the social, corporate and accounting practices in developing economies.

Empirical Analysis of the Impact of Top Management Team Social Networks on the Homophily Effect of ESG Disclosure in Companies

This study investigates the homophily effect in corporate information disclosure, specifically focusing on executive social networks. We analyze data from 385 privately listed companies in China’s Growth Enterprise Market between 2018 and 2021. An OLS regression model is employed to examine the presence of a homophily effect in ESG information disclosure by private enterprises, along with regional and industry variations. Additionally, we utilize a moderation effect model to assess the influence of executive social networks on the homophily effect of ESG information disclosure. We conduct robustness tests based on our findings. The results indicate a significant homophily effect in ESG information disclosure by private enterprises, with varying magnitudes across regions and industries. Furthermore, executive social networks positively moderate the homophily effect, suggesting that a more diverse social network among the executive team enhances the homophily effect of ESG information disclosure for private enterprises. These findings offer valuable insights for corporate low-carbon sustainable development.

Tax authority monitoring and corporate information disclosure quality in China

This paper studies the effect of tax enforcement on corporate information disclosure quality by exploiting the enforcement of the “Golden Tax-III” project in China as an exogenous variation in the tax authority monitoring. Our difference-in-differences estimates show that an increase in tax monitoring improves corporate information disclosure quality. This effect is more pronounced in firms with weak external supervision, weak internal governance, and firms located in non-eastern areas, and areas with lower fiscal pressure. Mechanism tests show that tax authority monitoring improves information disclosure quality through tax compliance channels. Our findings document that public enforcement can exert a governance effect on enterprises, especially in developing countries and areas.

Exploring the Multidimensional Perspective of Retail Investors’ Attention: The Mediating Influence of Corporate Governance and Information Disclosure on Corporate Environmental Performance in China

In the dynamically evolving global environment, enterprises grapple with an intricate web of social, environmental, and technological changes that demand heightened environmental efficiency and sustainability-oriented strategies. This study investigated the influence of retail investor attention on corporate environmental performance as well as the roles of corporate governance and information disclosure quality in Chinese publicly traded companies from 2008 to 2019. The empirical evidence reveals a positive association between retail investors’ attention and corporate environmental performance. The quality of corporate governance significantly affects environmental performance, while information disclosure quality exhibits a negative correlation. The study’s findings provide valuable insights for policymakers looking to improve corporate environmental efficiency. They suggest incorporating retail investor attention as a strategy for Chinese publicly traded firms to enhance their environmental performance. Overall, this study highlights the importance of corporate governance practices, information disclosure quality, and retail investor attention in achieving optimal environmental performance.

CEO Labor Market and Corporate Information Disclosure: The Case of IDD Rejection and Adoption

CEO Labor Market and Corporate Information Disclosure: The Case of IDD Rejection and Adoption

Foreign residency rights and corporate supplier concentration: Evidence from China

Using data of Chinese non-state-owned firms, we investigate the impact of controlling person’s foreign residency rights on corporate supplier concentration. We find that a firm’s supplier concentration decreases when its controlling persons have foreign residency rights, particularly when the country of residence has no extradition agreements with China or has a weak institutional environment. The impact is more pronounced for firms in competitive industries, firms with larger separation of control rights and cashflow rights, firms with fewer independent directors, and firms with fewer analyst coverage. Studies on influencing channels show that foreign residency rights decrease corporate supplier concentration through an increase in corporate fraud and cash flow risks, and a decrease in corporate information disclosure quality and overseas investment efficiency. Finally, we find that the reduced corporate supplier concentration accompanied by foreign residency rights decreases corporate operating performance and increases operating risk. We also find that suppliers’ such reaction can increase their operating performance and decrease operating risk.

Relationship Between Bank-Specific Characteristics and Web-Based Disclosures of the Commercial Banks in India

This article examines the extent of web utilization as a tool for the disclosure of corporate information on the website and exhibits the association between bank-specific attributes such as size, age, profitability, market discipline, listing status, leverage, foreign ownership, and type of sector in relation to the web disclosures of 87 public, private, and foreign sector Indian commercial banks. To achieve the objective, a checklist index of 143 items of information was developed. To examine the hypotheses of the study, a panel regression model was estimated on the data of 87 Indian commercial banks. Panel regression results indicate that size, market discipline (CAR), profitability, listing status, type of ownership, and type of sector have a significant relationship with the level of web disclosure, and banks are more likely to use the websites to disclose information. On the contrary, age, leverage, and market discipline (NPA) have insignificant relationship with the web-based disclosure level, and Indian banks have not shown any relationship with the disclosure score. The study will help the managers to meet the actual and potential informational needs of the investors; for the investor, it will help to assess investment decisions in a better way.

Regional Digital Economy Development, Information Asymmetry, and Enterprise Supply Chain Transparency: An Empirical Study Based on Chinese Listed Companies

The digital economy is an important supporting force for the high-quality development of contemporary economy. Based on the panel data samples of A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2008 to 2020, this paper empirically tests the impact of regional digital economy development on the transparency of enterprise supply chain. Research discoveries: The development of regional digital economy has reduced information asymmetry among enterprises, and enterprises no longer have to bear risks to disclose important information, thereby reducing the transparency of their supply chain; Heterogeneity testing found that: (1) the development of the digital economy has a significant inhibitory effect on the supply chain information disclosure of upstream or downstream enterprises in the industry value chain; (2) This effect is greater upstream in the industry value chain; (3) The digital economy development level of enterprises in the eastern, central, and northeastern regions of China has reduced their supply chain information disclosure. The research conclusion of this article is helpful in analyzing the policy effectiveness of current corporate information disclosure regulations, and also provides a basis for the subsequent formulation of relevant disclosure policies.

Tax enforcement and corporate financial irregularities: Evidence from China

This paper examines whether and how tax enforcement affects corporate financial irregularities in China, utilizing the merger of the State Tax Bureau (STB) and Local Tax Bureaus (LTB) in 2018 as a quasi-natural experiment. Our findings show that stricter tax enforcement significantly reduces corporate financial irregularities, especially for firms with lower tax compliance, poorer internal governance, laxer external supervision, and lower economic status. Furthermore, the mechanism tests demonstrate that stricter tax enforcement forces firms to reduce tax avoidance and tax reporting irregularities. These findings are consistent with the effective supervision channel. Our findings suggest that stricter tax enforcement can improve the quality of corporate information disclosure, and providing useful insights for alleviating information asymmetry and improving information environment in the Chinese capital market.

Corporate governance, information disclosure and investment - Cash flow sensitivity

We investigate the impact of cash flow on investment spending under the scenarios of underinvestment and overinvestment and the moderating effect of corporate governance and information disclosure on the sensitivity of both. The empirical analysis is conducted by selecting listed companies in the manufacturing sector from 2013 to 2020. We find that companies investment is highly sensitive to cash flow under financing constraints and overinvestment due to agency costs. In the case of overinvestment, improving the level of disclosure significantly mitigates investment-cash flow sensitivity; in the case of underinvestment, improving corporate governance significantly reduces investment-cash flow sensitivity.

Corporate Governance Research in the Digital Economy: New Paradigms and Frontiers of Practice

Digital technologies are increasingly changing the nature of competition and generating externalities that impact society. While the growth of a digital and sustainable economy may increase firm performance, these new trends also raise potential challenges for companies pertaining to corporate governance structures. In this paper, the impact of digitalization on corporate governance practices is discussed from the perspective of developing technologies and institutionalization, revealing potential effects, transformations, and steps to take. Our findings indicate that the development of the digital economy can facilitate enterprise digital transformation, enhance agency efficiency, and increase online media attention, thereby significantly promoting CSR performance for local firms. Digital transformation has an effect on the information quality and corporate governance, reducing agency costs, improving internal control, and attracting more analysts’ tracking, so as to build an effective trust mechanism between firms and the external market. The research conclusion of this article is helpful in analyzing the policy effectiveness of current corporate information disclosure regulations, and also provides a basis for the subsequent formulation of relevant disclosure policies. In addition to its theoretical significance, this paper also has important policy implications.