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Problems of information disclosure of listed companies in China

Author: DanChao From: www.yourpaper.net Posted: 2010-02-06 15:04:12 Read:
Abstract: China's stock market information disclosure system from scratch, and has formed an information disclosure system, and play an active role in the maintenance of order in the stock market, and protect the interests of investors. However, the problem of information disclosure of listed companies is still a lot of illegal information disclosure violations still occur. Depth to reveal the problems of information disclosure, find countermeasures governance disclosure, in order to improve the quality of listed companies, and still need a serious discussion.
Keywords: information disclosure; corporate governance; external regulatory

1 information disclosure of listed companies in China exist

1.1 Information disclosed initiative
The number of listed companies information disclosure as an additional burden, not take the initiative to disclose relevant information, but hold less disclosure on as little as possible the concept of disclosure. The fundamental reason is that there are more reluctant to let the public know the dark spots of listed companies in its operation and management.
1.2 Information disclosure is untrue, inaccurate
Listed companies to disclose the information must be accurate, true and not false records, misleading or deceptive, which is a basic requirement. However, some of the information disclosure of listed companies serious misrepresentation from the prospectus to the temporary, periodic reports, has been a pack of lies.
1.3 Information disclosure is not serious
The arbitrary strong information disclosure of listed companies, regardless of time, occasion, place random disclose information words these seemingly factual for groundless message greatly encouraged the Chinese stock market speculation. Meanwhile, with the times. Disclosure process is the lack of regulation and supervision necessary.
The 1.4 information disclosure is inadequate, incomplete
Listed companies should be "in accordance with the law and adequate disclosure of the contents of a complete financial report adequate disclosure of matters within the statutory range of major events actually occurred. In fact, most of the financial statements of listed companies in China is not complete, for full disclosure of related party transactions and other significant events rarely.
1.5 timely information disclosure
As we all know, the market price of the listed companies to disclose information about their stock is closely related, the information often played the role of price signals. Timely disclosure of information to help investors make the right investment decisions; timely disclosure of information, but as an insider staff to take advantage of the time difference for insider trading, to profiteering or timely hedging conditions. In the case of violations of the listed companies in China, information disclosure is not timely is not uncommon.

The causes of the problem
2 information disclosure of listed companies in China

Information the false disclosure issues are inseparable from the emergence and development of the enterprise and corporate system. Under the conditions of the separation of ownership and corporate enterprises, shareholders do not directly manage the enterprise, financial position and operating results of the company's periodic reports by the operators, so that the formation of an agency relationship between shareholders and managers. Due to reward operators with the company's operating results are closely linked between the operators for their own interests will intentionally disclosing false information to whitewash the company's financial position and operating results, damage to the interests of shareholders. Therefore, the false information is inseparable from the corporate governance structure and corporate enterprises principal-agent model.
Commissioned the existence of the agency relationship, as well as information asymmetry caused by adverse selection reasons, false information disclosure of the basis for the existence and conditions, corresponding to standardize the information disclosure of listed companies in the process of establishment and improvement of China's modern enterprise system, it appears very necessary. Specific to our country, and the causes of this phenomenon can be attributed to the the enterprise both internal and external factors.
The 2.1 listed companies own reasons
2.1.1 conditions are not ripe rush to market funding
Listed is a powerful means to promote the development of enterprises in the international success abroad most of the large enterprises are listed companies. But the securities markets of Europe and the United States and other countries have been one or two hundred years or even longer history of the development, the scale of its securities market is gradually formed, of joint-stock only two decades, is still in the initial stages of development. At this stage, some of our corporate and management department managers of joint stock and stock listed there are a number of misunderstandings, such as the joint-stock equivalent shares listed and investors due to lack of stock market knowledge also appears to be excessive speculative behavior, so companies listed on a particularly strong desire, at the same time possible adverse factors listed on neglect to consider the seriousness of the lack of understanding of the laws and regulations on information disclosure system.
2.1.2 interests of the company driver
Due to asymmetric information, managers have a lot of private information, in order to establish a good image in the current stock market, and an invincible position in the competition, often report a cosmetic and beautification, continued use of the accounting fraud, manipulation of profits. Some of them in order for listing false statement of equity and results; some exaggeration of profits, in order to achieve the rights issue or raise the price and misrepresent their performance; whitewash some from special treatment or delisted performance, to manipulate profits.
2.1.3 corporate governance structure defects, agency costs too much
Exist in the current governance structure of listed companies in China due to the dominance of state-owned shares, the absence of owners, internal control, constraints and poor incentives and other issues. Company's internal lack of self-discipline and supervision mechanisms, some listed companies lack the internal accounting and management control, accounting foundation is weak oversight weakness, internal audit oversight function is weakened.

2.2 external causes of listed companies
The specification 2.2.1 information disclosure of listed companies in China to develop and implement imperfect
Normative in China lagged behind the practice, so that the gap between the two, and some enacting disclosure requirements are not clear or the lack of maneuverability, more importantly, some of the terms of the standards, policies and regulations have been issued between conflicting , the listed companies at a loss, CPA auditing system is imperfect weaken the role of witness information.
2.2.2 Certified Public Accountant practicing poor quality the lack of effectiveness of audit and supervision
The one hand, the existing accounting firms, mostly affiliated to set up or established by the government to weaken the independence of audit, as well as the weakening of the oversight mechanisms; On the other hand, the current audit angle weak risk awareness, lack of awareness of the responsibility and risk of audit. The same time, the problem of the lack of ethics is also an important part of the Certified Public Accountant.
2.2.3 China's securities regulatory body system is not perfect, inadequate supervision
Securities regulators system have yet to be straightened out, SFC there are loopholes in the regulatory norms, there are blind spots in the range, there is the time lag. In addition, the way of supervision and punishment lack the necessary specifications and experience. The existence of these problems, making external regulation of the securities industry in China is in urgent need of improvement and perfection.

Eliminate false disclosure of listed companies countermeasures

strengthen governance of listed companies
Governance of listed companies, from the company responsible for the human and financial officers of the two roots. First, they want to frequent legal education and professional ethics education, so that they firmly establish responsible unit accountability risk awareness, establish good faith, the idea of ??operating in accordance with the law, and governance on a fundamentally false information; Secondly, from institutional arrangements to reduce the generation of false information. One is to improve the corporate governance structure; Second, is necessary to improve the company's internal accounting control system, the implementation of strict control over the economic activity of the company, to regulate the financial behavior, in order to ensure that the information is true and complete.
3.2 external supervision of intermediaries
In order to ensure that the intermediaries on the quality of the supervision of listed companies, intermediaries attitude is responsible for the majority of investors, and constantly improve the quality of professional ethics and practice standards. Competent authorities as intermediaries to really take on the responsibility constraints intermediaries behavior, intermediaries breach of professional ethics or misconduct must not be tolerated as a management departments should increase the punishment.
3.3 to strengthen the company information disclosure regulation
In the stock market, not enough shares to participate in the management of the public investors, the information disclosed by the company is the most direct source of information for investor decisions. Ongoing information disclosure system is conducive to the elimination of stock market information asymmetry and inadequate to curb insider trading and fraud, stock market transparent and norms. Must strictly examine information on company performance and the associated transaction information, fraud, and they should be severely punished according to law. Introduction of civil compensation system as soon as possible, be financial compensation for losses caused by publication of false information to investors by listed companies. In addition, in order to improve the timeliness of the information disclosure of listed companies, to address institutional require them to increase the frequency of information disclosure.
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