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Impact of information disclosure ratings on investment efficiency: evidence from China

Author

Listed:
  • Chang-Chih Chen

    (Providence University)

  • Kung-Cheng Ho

    (Guangdong University of Finance and Economics)

  • Hui-Min Li

    (Henan Finance University)

  • Min-Teh Yu

    (Providence University and NCCU-RIRC)

Abstract

This study examines the impact of Shenzhen Stock Exchange’s (SZSE) information disclosure ratings on investment efficiency in China. Based on a sample of Chinese A-share listed companies on the SZSE from 2001 to 2018, we discover that superior information disclosure ratings improve investment efficiency after controlling for various firm- and industry-level variables. Our findings remain valid after various robustness tests and using instrumental variables to address the endogeneity problem. Specifically, we find that improving information disclosure ratings help firms attract more investor attention, which leads to higher investment efficiency. In addition, this information disclosure effect is more pronounced for underinvestment firms and firms on the main board than for smaller firms on SEM (small- and medium-sized enterprise) and GEM (growth enterprise market) boards. Our evidence supports the idea that regulatory activities for information disclosure ratings of companies listed on China’s stock exchanges improve investment efficiency.

Suggested Citation

  • Chang-Chih Chen & Kung-Cheng Ho & Hui-Min Li & Min-Teh Yu, 2023. "Impact of information disclosure ratings on investment efficiency: evidence from China," Review of Quantitative Finance and Accounting, Springer, vol. 60(2), pages 471-500, February.
    • Handle: RePEc:kap:rqfnac:v:60:y:2023:i:2:d:10.1007_s11156-022-01101-8
    DOI: 10.1007/s11156-022-01101-8
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    Cited by:

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    2. Deng, Qi & Zheng, Linhong & Peng, Jiaqi & Li, Xu & Zhou, Zhong-guo & Hussein, Monica & Chen, Dingyi & Swartz, Mick, 2024. "The impacts of registration regime implementation on IPO pricing efficiency," International Review of Financial Analysis, Elsevier, vol. 93(C).
    3. Yu Zhong & Jian Li & Shuochen Luan & Yixuan Wang, 2024. "How Does Foreign Direct Investment Impact the Sustainable Development? Empirical Evidence from China’s Coastal Areas," Sustainability, MDPI, vol. 16(12), pages 1-22, June.
    4. Kung-Cheng Ho & Andreas karathanasopoulos & Chia Chun Lo & Xixi Shen, 2024. "Information disclosure ratings and stock price crash risk," Review of Quantitative Finance and Accounting, Springer, vol. 63(4), pages 1323-1348, November.
    5. Hanyu Zhang & Rong Ding & Hang Zhou, 2024. "Public access to in-house meeting reports and stock liquidity: evidence from China," Review of Quantitative Finance and Accounting, Springer, vol. 62(4), pages 1431-1458, May.

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    More about this item

    Keywords

    Information disclosure ratings; Investment efficiency; Investor attention; Main board; Agency problems; Information asymmetry;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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