عوامل و ویژگی های افشای داوطلبانه در بازار بورس چینی

This paper offers in-depth analysis of the determinants and features of voluntary disclosure based on information in the annual reports of 1066 Chinese firms listed on the Shanghai and Shenzhen Stock Exchanges. This extensive sample represents about 80% of all public companies in China. Our findings suggest that voluntary disclosure in China is positively related to firm size, leverage, assets-in-place, and return on equity and is negatively related to auditor type and the level of maturity or sophistication of the intermediary and legal environments. We also find some evidence to suggest a quadratic convex association between state ownership and voluntary disclosure. However, our analysis provides no evidence that extensive disclosure benefits public companies in China in the form of a lower cost of equity.

Voluntary disclosure is a common way for a public company to disseminate company information not required by mandatory disclosure requirements to its investors and the general public. Earlier studies have suggested that this type of disclosure may benefit both investors and the public companies themselves in specific areas. For example, Diamond and Verrecchia (1991) and Kim and Verrecchia (1994) claim that voluntary disclosure can reduce information asymmetry between informed and uninformed investors. Moreover, empirical studies carried out by Barry and Brown, 1986 and Botosan, 1997 and Piotroski (1999) demonstrate, among other things, that voluntary disclosure helps to reduce the cost of equity. However, more recent studies have indicated that the abovementioned benefits may not hold for all stock markets. Using a dataset comprising 110 public companies with both A- and B-share listings in China, Wang et al. (2008) investigate the effects of voluntary disclosure and find no evidence that these companies benefited from that disclosure in the form of a lower cost of debt capital. Their analysis suggests that voluntary disclosure in the Chinese stock market exhibits determinants and characteristics that may be very different from those found in the stock markets of developed countries. We intend to carry this line of thought further by investigating more closely the determinants and consequences of voluntary disclosure in the Chinese stock market using a much larger dataset – 1066 Chinese public companies – than that used in Wang et al. (2008). This extensive dataset represents about 80% of public companies listed on the Chinese stock exchanges that have a relatively complete historical record of annual reports. Our investigation is motivated by two considerations. First, since their establishment in 1990 and 1991, respectively, the Shanghai and Shenzhen Stock Exchanges have become major global stock exchanges in terms of total capitalization, trading volume and the rapid pace of growth in the number and size of public companies. Also, a large individual investor population trades shares on both exchanges and China boasts an ever-increasing number of institutional investors. Further, foreign investors with Qualified Foreign Institutional Investor (QFII) status have also begun to invest directly in the Chinese stock market. Previous studies have found that both individual and institutional investors in China are less experienced and more restricted than their counterparts in developed countries such as the United States (Chen et al., 2004, Bailey et al., 2009 and Deng and Xu, 2011), which may influence their understanding of financial reports and, in turn, affect the disclosure motivation of listed firms. The growing complexity of China’s stock market calls for a better understanding of the key aspects involved, which will benefit investors, public companies, and regulators alike. Voluntary disclosure is one such key aspect, the effects of which concern all of these market players. Second, China has a distinct political and geographical environment. As an emerging economy, China’s capital market is not as efficient as those in developed countries, such as the United States. Moreover, the country’s regulatory environment is less mature than those in developed countries, which have taken half a century or more to develop. Also different from more mature economies, the majority of listed companies on the Chinese stock exchanges are ultimately controlled by the central or local governments owing to the country’s long history of a planned economy. These firms are called state-owned enterprises (SOEs). A large percentage of SOEs are in essential industries, rich in resources, and directly responsible to the government, and often enjoy rights and privileges unavailable to private companies. Consequently, they have different corporate governance mechanisms compared to firms listed in the United States, most of which are privately controlled (Xu and Wang, 1999, Qiang, 2003, Clarke, 2003 and Wang et al., 2004). These corporate governance mechanisms result in the Chinese stock market having a number of distinct characteristics that in turn influence the determinants and consequences of voluntary disclosure by the public companies listed in China. These two considerations suggest both the necessity and the particularity of an in-depth, thorough investigation aimed at reaching a better understanding of the nature and effects of voluntary disclosure in the Chinese stock market. Some studies have been conducted in this and related areas. Ferguson et al. (2002) examine voluntary disclosures in the annual reports of SOEs listed on the Hong Kong Stock Exchange and conclude that these companies tend to disclose significantly more information than other companies listed on the same exchange. Using a dataset of the 300 largest public companies at that time, Xiao et al. (2004) analyzes the factors behind Chinese listed companies’ voluntary adoption of Internet-based financial reporting and the extent of their disclosure. Wang et al. (2008) conduct a more focused study to test the determinants and consequences of voluntary disclosure in China using a relatively small sample comprising only firms issuing both A and B shares. Our study can thus be viewed as a natural step forward in offering more extensive analysis based on a greatly expanded dataset. The dataset we use includes all companies listed on the Shanghai and Shenzhen Stock Exchanges at the end of 2006, with the exception of banks and insurance companies. The level of voluntary disclosure is modeled by DSCORE, an index score generated on the basis of the voluntary information released in firms’ annual reports. This score has its origins in earlier studies, such as those of Botosan (1997), and is tailored to the Chinese context. A set of factors commonly investigated in the literature, including firm size, leverage, liquidity, assets-in-place, return on equity (ROE), auditor type, and ownership diffusion, among others, is analyzed to determine the effects of each on voluntary disclosure. Our statistical analysis reveals that firm size, leverage, assets-in-place, ROE, ownership diffusion, and auditor type are significantly associated with voluntary disclosure, with auditor type strongly associated. However, our findings suggest that liquidity and the proportion of non-executive directors on the board have no significant influence on voluntary disclosure. We also add two Chinese market-specific factors, the intermediary and legal environments and state ownership, to the regression to test whether they play any role in the voluntary disclosure decision. Although most of the foregoing general factors remain significant in this regression, we find a negative and significant relationship between the intermediary and legal environments and voluntary disclosure. With regard to state ownership, we conjecture that it has a quadratic convex relationship with the level of disclosure, as there is both theoretical and empirical evidence to suggest a more complicated association between the two than a linear relationship. To further test the influence of state ownership and governance, we carry out another test by first dividing the sample into two subsets based on the firms’ ultimate owners and then performing the regression separately on each subset. In this test, many of the aforementioned factors lose their significance in one or both subsets. For firms ultimately controlled by the government, firm size, ROE, auditor type, the intermediary and legal environments, and state ownership remain significant and in the same direction as those in the general regression. For firms ultimately controlled by private families, leverage, auditor type, ownership diffusion, and state ownership remain significant. This evidence demonstrates the different characteristics underlying the disclosure preferences of different types of firms. What is particularly notable is that the signs of the coefficients of state ownership in the two regressions are opposite: the level of disclosure decreases with state ownership in privately controlled firms, but increases in government-controlled firms. These results reveal a clear quadratic association between state ownership and voluntary disclosure, as predicted. To test the relevance of voluntary disclosure to the cost of equity in the capital market, we construct an ordinary least squares (OLS) model between the two. The results of the model reveal no evidence that firms benefit from extensive voluntary disclosure in terms of a lower cost of equity, which is contrary to the claims made in studies of stock markets in developed countries. In China, voluntary disclosure appears to have no significant influence on the cost of equity. This study contributes to a better understanding of the determinants and features of voluntary disclosure in the fast-growing Chinese stock market. By examining a much larger dataset than previous studies and testing a wider range of factors, we are able to report relatively reliable, more general results and to offer useful insights into investors, public companies, and regulators with regard to voluntary disclosure in the Chinese context. The remainder of the paper is organized as follows: Section 2 develops our hypotheses with the help of prior theoretical results. Section 3 describes the sample dataset and test methods, and Section 4 reports the empirical test results. Section 5 analyses the regression results and Section 6 concludes the paper.

This study investigates the determinants and features of voluntary disclosure among companies listed on the Chinese stock market. Using a sample representing more than 80% of all public companies in China, we find evidence that differs from the findings of previous studies employing smaller samples, indicating that the Chinese stock market has a number of distinct features in connection with voluntary disclosure. In tests of the entire sample, we find that firm size, leverage, assets-in-place, ROE, and ownership diffusion are significantly associated with voluntary disclosure and that auditor type and the intermediary and legal environments are highly significantly associated with voluntary disclosure. The sign on auditor type does not conform to previous studies, suggesting a different situation in China. We also find a quadratic convex association between state ownership and disclosure level, which helps to explain the inclusive empirical evidence presented by Xiao et al. (2004) and Wang et al. (2008). When subsamples are tested, many of the explanatory variables lose their significance in one or both groups. This disparity suggests a significant difference in firm characteristics and accounting policy preferences between government and privately controlled firms. More importantly, the signs of the coefficients of state ownership in these two regressions are in opposite directions. The disclosure level decreases with state ownership in the privately controlled subsample, but increases with it in the government-controlled subsample, revealing a clear quadratic relationship. Furthermore, voluntary disclosure exerts no significant influence on the cost of equity, which casts doubt on the relevance of the voluntary information disclosed in annual reports to investors’ decisions in the Chinese context. The findings of this study will help Chinese regulators to fine-tune the country’s regulatory policies to better suit the needs of the market. For instance, both state-owned businesses with a lower proportion of state ownership and private businesses with a higher proportion of such ownership may require more regulation to guarantee transparency. The findings will also benefit investors by providing them with a better understanding of the credibility of the annual reports supplied by companies with certain characteristics. The irrelevance of voluntary disclosure to the cost of equity reveals several deficiencies in the Chinese stock market and points to the need for better regulation and reform. These potential implications of our findings suggest the desirability of future research that further refines and broadens our analysis. Three limitations of the study are particularly worth mentioning. First, the study involved a one-year test. Although industry and ultimate controller biases are controlled for, it is possible that there are year-specific influences, particularly with regard to the cost of equity. Second, although most of our regression models are statistically significant, their range of adjusted R-squares suggests that other potential determinants of voluntary disclosure may exist. Finally, we focus on only one form of disclosure vehicle, the annual report. Additional studies could be conducted to analyze other vehicles, such as quarterly reports and press releases. What is the benefit of voluntary disclosure for Chinese firms? We posit two possible benefits for testing in further research: future seasoned equity offerings (SEOs) and a lower cost of equity in the future. First, as Chen and Wang (2007) report, Chinese listed firms prefer to issue additional shares after their initial public offering through SEOs. To attract investors for future SEOs, firms have the motivation to disclose more information than is mandatory. Second, although we are unable to find any evidence to indicate that voluntary disclosure affects the cost of equity in this study, the Chinese stock market is developing very quickly. As investors become more experienced, it is likely that firms engaging in more extensive voluntary disclosure will benefit in terms of a lower cost of equity in the future.