A longstanding literature debates whether disclosure should be mandated by government regulations,or whether firms have adequate incentives to voluntarily disclose at socially optimal levels(Bushman and Landsman,2010)...
详细信息
A longstanding literature debates whether disclosure should be mandated by government regulations,or whether firms have adequate incentives to voluntarily disclose at socially optimal levels(Bushman and Landsman,2010).An equally important question is the effectiveness of disclosure regulation in solving the information and agency problems in capital markets(Healy and Palepu,2001).In this research,we examine the effectiveness of a disclosure regulation in China's unique institutional regime,where earnings guidance disclosure is required for firms with prior loss and material net income increase/decrease by 50%or more,so as to alleviate the concern that firms may withhold material *** distributional histogram of earnings changes shows a discontinuity in the vicinity of the 50% earnings decrease from 2001 onwards,and discretionary accruals of firms with earnings decrease by 40-50%are significantly *** results suggest that firms are likely to use earnings management to avoid earnings decrease by more than 50%and compulsory negative guidance *** addition,we find that earnings management is highly costly,because firms successfully avoiding the 50%earnings decrease threshold often exhibit high discretionary accruals at the year after,otherwise they are likely to move back to compulsory negative guidance disclosure next *** this vein,earnings management does not really 'avoid' negative disclosure,but 'delay' negative *** research adds a piece of empirical evidence to the literature whether firms engage in avoidance strategies to impair the effectiveness of the regulation(Leuz and Wysocki,2008),by indicating that while market is not perfect,neither is government regulation.
暂无评论