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The information disclosure of listed companies in China: Problems, Causes and Solutions

Author: SunZhuPingˇˇXieRuiFeng From: www.yourpaper.net Posted: 2009-10-24 22:50:30 Read:
Abstract: information disclosure of listed companies is a important issues related to corporate, social, investors and other interested parties. The quantity and quality of information disclosed directly affect the investor's judgment and decision-making, but also related to the securities market that it is functioning, and to maximize the benefits for shareholders and society. Variety of factors led to a series of problems exist in the information disclosure of listed companies in China, produces many adverse consequences, and disclosure mechanisms to solve the fundamental problem of the information disclosure must be formed from the macro and micro levels.
Keywords: information disclosure; China; listed companies

First, the problem of the information disclosure of listed companies in China

Information disclosure of non-initiative. The number of listed companies, information disclosure seen as an additional burden, rather than see it as one should assume the obligations and shareholders should be given the right to. Those losses listed companies always worry about losing allotment status or suspension. Listed company in terms of its operating management, there are more reluctant to let the public know the negative information, an evasive psychological information disclosure.
Information disclosure lag. An important quality requirements of accounting information disclosure timeliness. Once the opportunity is missed, the relevance of the information will greatly reduce and even useless. Listed companies sometimes fear that the disclosure of the information would affect the price, often delay disclosure of the company's major information resulting information lag. According to statistics, more than 80% of the listed company's financial report after the end of the fiscal year 4 monthly report out before this, wise investors already through other channels to get to quite a lot of information, made as early as on the decisions of other investors. This accounting information disclosure lag serious damage to the economic interests of other investors, contrary to the securities market "open, fair and impartial" principle.
Information disclosure falsehoods or misleading statements. Information disclosure falsehoods is the most serious in the information disclosure of listed companies in China, endangering the biggest problem. The prevalence of false representations and misleading statements is the root cause of China's securities market information asymmetry. Information asymmetry is very prone to price manipulation, resulting in the securities market supply and demand sides, a lot of irrational speculation. The one hand, increase the risk of the securities market, on the other hand direct damage to the interests of investors. For example, Guangxia and Lam shares deliberate fraud and false disclosure behavior, the SME board Jiangsu Qionghua false disclosure behavior of investment in bonds belong to this column.

Information disclosure contains material omissions. Defined in the accounting standards, clear and easy to understand financial statements, it is necessary to provide the necessary information (including financial and non-financial information), that the accounting information must have integrity. But in actual operation, and some self-interest as the center, nothing but good news unfavorable to the company's stock price information or an excuse for trade secrets not be disclosed or equivocal increase difficult for retail investors to make the right judgments. : One of insufficient disclosure of transactions between associated enterprises; corporate financial indicators prompted insufficient; Third, capital investment whereabouts and profits constitute inadequate disclosure of information; Fourth, some important matters disclosed full; Fifth borrow the grounds of the protection of trade secrets intentionally concealed important accounting information. Inadequate disclosure of information easier to mislead investors, and to provide more opportunities for speculators.

, Listed companies' information disclosure of the causes of many problems analysis

1. Internal factors - the governance structure of listed companies is inherently flawed. The defects of the corporate governance structure restricts the quality of information disclosure. The majority of listed companies in China by the restructuring of state-owned enterprises established to raise equity relative concentration of the formation of the widespread phenomenon of "dominance". Equity over-concentrated in the hands of large state-owned shareholders will have many problems, such as the large state-owned shareholders and listed companies on the personnel, assets, financial long-term, regardless of family assets of listed companies can not be guaranteed; prevalence of related party transactions, internal control phenomenon relatively common; lack of independence of the Board, the Board of Supervisors functionality is very limited, it is difficult to form an effective constraint checks and balances. Like the "ST Lingguang, ST Monkey King", "Jinan Qingqi, Guangdong, Kingman," March medicine "and other major shareholders of listed companies, are to use their control over the status of listed companies, under the guise of various The species name, and even prepare false financial reports to occupy the capital of the listed company. In the eyes of the major shareholders of listed companies has become their "ATM" serious damage to the legitimate rights and interests of small investors.

Institutional factors - the regulatory mechanism of the listed companies are not sound enough. First, regulators have not done enough. The comparison of the costs and benefits to promote formation of the disclosure of information distortion motivation. From the theoretical point of view, as long as there is some kind of institutional arrangement enables untrue disclosure of information behavior expected cost is much higher than the expected return, can effectively suppress these behaviors. "Exerting authority, only the regulators to increase penalties in order to play an effective deterrent improper information disclosure of listed companies. Other emerging markets, China's securities market regulatory system is weak, backward means of supervision, the supervisory staff shortage listed companies for accounting fraud was discovered very small probability. In addition, to date, the regulatory authorities are mainly relying on administrative penalties, to combat the listed companies' information disclosure distortion, very few of their immediate responsibility, be held criminally responsible, civil compensation is minimal. Therefore, disclosure of information the the distortion (fraud) even if it is found that the price paid is extremely limited. Second, the regulatory system is not sound. The Guangxia "fraud Events shocking, in the process of reflection, our understanding of the regulation can be found still stay in after the SFC judicial intervention to prevent or expose frauds during the entire incident, if earlier, be reflected in the fairness and efficiency of the market, can effectively curb the occurrence of the fraud case.
Audit factors - the practice of accounting firm as an intermediary is not standardized. Intermediaries illegal practice of affected truthful disclosure of information, even a certified public accountant with listed companies collude false in order to achieve the purpose of their own interests collusive behavior. In the case of widespread internal control of listed companies, the real power in the appointment of the accounting firm in management rather than shareholders' meeting, such distortions appointment system often encouraged intermediaries "Helenians money to help people ward off" mentality. In addition, due to the economic benefits, the impact of related party transactions, self-evaluation and external pressure, and other factors, the lower the independence of the Chinese Institute of Certified Public Accountants; registered public accounting firm smaller, lighter liability, CPA's professional competence, moral level, low judgment and so contribute to the non-standard accounting information disclosure of listed companies.
Social roots - the lack of a social credit system. Depression Economics, Krugman pointed out, the only economic system can not solve the problem of moral hazard, the greater the faster development of the national space create moral hazard. From the point of view of game theory, the integrity essentially game participants for the long-term interests at the expense of the immediate benefits of a informal constraints; seems from the perspective of institutional change, it is purely a matter of personal behavior by individuals. China is still not legal and natural persons credit established, confirmed, punishing the formation of a set of sound system, which makes China's market economy, there are more serious moral hazard. Many companies listed as the ultimate goal, re-financing, the Light restructuring, results of operations do not increase, often the false news wantonly misappropriating. In addition, the managers of listed companies incentive system to promote the company managers over the pursuit of short-term interests, will stimulate the information disclosure of listed companies distortion.

Third, the countermeasures

1. Improve the corporate governance structure. First, the government should develop more specific regulations to enhance the independence of the Board, to establish its central position in the corporate governance, such as the implementation of the directors and managers of cross-office director, manager duties is not compatible with the system, a clear division of their respective functions and powers of, eliminate ; provisions of the board of directors of listed companies must introduce a considerable proportion of independent directors, independent directors do not own shares of the Company, and not in the company office, less influenced by large shareholders and insiders, on behalf of the shareholders, especially minority shareholders can exercise their powers. Secondly, the change of directors, managers are mainly generated by the administrative channels of the status quo, to vigorously develop the market of professional managers, more selection and appointment of the Company through market-based instruments and market competition managers. Third, the implementation of the directors, managers period stock incentive plan, the director, the manager's personal interests and the long-term value of the company grew, their choice of accounting policies consistent with the interests of shareholders. This is conducive to a sound internal system of checks and balances, to improve the corporate governance structure of listed companies, will also benefit the formation of a good system of information disclosure of listed companies.
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