Impact Of Information Disclosure Violation On Firm Value In Chinese Listed Firms

Main Article Content

Bin Li

Keywords

Violation, Information Disclosure, Firm Value, China Securities Regulatory Commission (CSRC) Enforcement Action

Abstract

We analyze the association between information disclosure violation (IDV) and firm value, based on a sample of Chinese listed firms that were subject to China Securities Regulatory Commission (CSRC) enforcement actions from 2000 to 2014. Using Tobin’s Q as a proxy for firm value at the end of the enforcement action year, we find that firm value in violating firms is significantly lower than firm value in non-violating firms. Further, we find IDV with the following characteristics can cause serious damage to firm value: IDV related to inflated profit or asset fabrication have a more damaging effect on firm value; the total number of violation types, fines and the total number of admonishment types are negatively associated with firm value; violation frequency and number of years between violations and CSRC enforcement action are negatively related to firm value.

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