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On the listed company to clarify the notice of supply and demand

Author: WangZuo From: www.yourpaper.net Posted: 2009-04-07 22:52:34 Read:
Paper Keywords: Clarification Announcement of supply and demand listed companies

Abstract:
as a special category of listed companies disclosed the form to clarify the notice by the regulatory authorities and the market is growing concern. This article is based on an economic point of view, to clarify the notice of the supply-side management of listed companies, investors, information intermediaries and other market players is to clarify the demand side of the announcement, and further analysis to clarify the causes of the announcement. This paper argues that the root cause of a clarification announcement is asymmetric information in the capital market, regulatory authorities should strengthen the control of the clarification announcement, protect fair and protection of small investors.
Paper Keywords: Clarification Announcement of supply and demand listed companies

The capital market is also an information market, its financing and investment functions through the complex flow of information. Information disclosure of listed companies is the main source of market information, listed companies follow the regulation requires the disclosure of accounting reports and comments, audit reports and other regulatory information, but also voluntary disclosure in accordance with the ego needs.
In recent years, as a special category of listed companies disclosed form to clarify the the announcement up more gradually, regulators and market increasingly close to their degree of concern. The reason there are two, one is to clarify the notice general market rumors or media reports-related announcement attitude to a certain extent mapping quality and level of listed companies' information disclosure; clarify before a public announcement, the company's share price often fluctuate significantly, to clarify the notice The relationship between the timeliness and completeness of the market fair and impartial market information of the parties involved. In this paper, the economics of supply and demand theory states that the supply of management of listed companies to clarify the announcement, investors, intermediaries and regulators demand side. The regulation listed companies to clarify the notice to the establishment of a good market order to reduce insider trading and maintenance of fair market.

supply of listed companies to clarify the notice motivation analysis

In recent years, China's capital market to clarify the announcement gradually increased its external objective reasons, on the one hand, with the development of communication technology, especially the decline in popularity of the Internet, information search and information dissemination costs and faster, company news spread extremely quickly; On the other hand, the market environment is getting better and better, into the medium-and long-term bull market, investors prefer to search sought after message, the company's share price is prone to unusual fluctuations. Related undisclosed major news spread in the newspapers, portals, or market, or financial analysts, experts and scholars, individual investors and other stakeholders questioned the important aspect of the company's financial operations, caused the market for listed the widespread concern of the company, the management of listed companies must be disclosed decisions about whether to clarify the notice issued. This paper argues that management issued to clarify the announcement motivation main information penalties for violations of the control mechanisms, information lag authentication mechanisms, signal transduction mechanisms, and impression management motives.
The
violations - punishment mechanism (a) disclosure regulation
This is the management to clarify disclosed in the announcement of the decision-making primary consideration. In accordance with regulatory requirements, management should be timely, accurate, clear, complete disclosure of the requested information, external information that management may violate disclosure control laws to reduce the regulatory penalties may be incurred by the management will be released to explain clarification announcement. Mandatory disclosure system effectively limit management the ability to remain silent, such as the provisions of Article 61 of stock issuance and trading of the Provisional Regulations, the message may appear in any public media misleading the market price of the shares of listed companies impact, the company is aware of should the message immediately make a public clarification.
(B) information lag authentication mechanism
Outside the company spread the news is true, may be after the disclosure of information or other competing channels of information confirmed, the management continued to remain silent, may have to bear a greater risk of information withheld (withheld difficult) and more adverse economic consequences.
(C) the signal transduction mechanism
The market has formed a recognition that management will be good news for the early release, delayed release or withhold some bad news, circulated on the market the company's major news, especially bad news, management continues to remain silent means transmitting signals to the market: The news is correct, do not stand or late position will result in adverse economic consequences of enlargement, may lead to greater volatility, damage to the company and management of the market image, there may even affect the day-to-day financial business activities.
(D) impression management motivation
Those who aspire to become market listed company or the management of the long-off for the formation or maintenance of some sort of their own ideal image of the market, there will be consciously affect the reaction of the other parties in the market, in order to maximize the expected return or punishment minimized. The face of unexpected external company, has established a good image is threatened, the management will need to use protective action to maintain the image corresponding to clarify disclosure effective way. Of course, this image building behavior is passive rather than proactive. Shenzhen Development Bank (000001.SZ) announced that the 2006 Annual Report, CITIC Securities researcher pointed out that Shenzhen Development Bank annual net profit growth of 370% is not a real business growth but from less provision for bad debts, listed as the worst asset quality the least provision for banks and non-performing loans, the company stock value should be around $ 8 (the deep development of the market price of 20 yuan). CITIC Securities analysis report caused the market focus on the Shenzhen Development Bank's annual report. Shenzhen Development Bank to respond quickly to clarify the notice issued during the second day, said the bad debt provision for compliance, operational risk control.

listed companies to clarify the notice needs analysis

Agency problems between management and investors the information asymmetry (Jensen and Meckling, 1976), management to insider information, information superiority parties, and investors in the information disadvantage. There are two ways to solve the information problem, First, management to reduce agency costs of voluntary disclosure, the second is to reduce transaction costs and social welfare loss and improve market Pareto efficiency, regulators provide an appropriate level of information disclosure regulation. However, these two approaches can not be guaranteed to completely eliminate information asymmetry Information lemon problem persists (Akerlof, 1970). Due to the the super economic consequences, market participants insider information search the market rumors have a market, along with the market when the share price of a company message appears when abnormal fluctuations stakeholders to clarify the notice of demand side.
To clarify the notice requirements including present and potential investors, information intermediaries and other (creditors, employees, suppliers, etc.) investors need to clarify the information to help them decide the investment decision, shareholders will also focus on an assessment of the correlation of the enterprise to pay dividends capacity Information. Information intermediaries, market rumors may bring widespread concern of listed companies, information services, increased demand for information to clarify the disclosure not only reduce financial analyst information gathering, and will attract more analysts concerned about the listed companies, to improve the analysis division supply capacity. In addition, there are other cases, such as: loans need to clarify the information to help them determine whether the security of the loans and loan interest due to be settled. Suppliers and other trade creditors need to know to help them determine claims due for settlement information. Government and its agencies may need to know the information to help them manage the activities of enterprises.

strategy to strengthen the supervision of listed companies to clarify the notice

Timely, accurate, complete, clear Clarification of disclosures in favor of capital markets function properly, maintain the market "Three". However, some listed companies to clarify the notice but Cheng and unclear, one, expressed vague, does not meet the clear requirements of information disclosure; Second, the delay in disclosure, and contrary to the timeliness of information disclosure requirements; Third, inadequate , glossy, inconsistent with the integrity of information disclosure requirements; Fourth, false disclosure, market manipulation is suspected. To clarify the notice of violation disclosure is based on management's self-interest to consider an information disclosure policy, the management of listed companies by consciously control the time of disclosure, the content and the way to seek profit, and even the use of information asymmetry, waiting for the rumors and clarify the notice stimulate the stock prices, and profit in the the rumors confirmed high throw shares, which are seriously damaged the interests of medium and small investors.
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