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A separate monitoring organ and disclosure of firm-specific information

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Listed:
  • Zhenyu Wu
  • Yuanshun Li
  • Shujun Ding
  • Chunxin Jia

Abstract

As the economy is recovering from the recent financial crisis, we explore the appropriateness of a corporate monitoring organ, which is a component separate from the board of directors, to enhance firm-specific information disclosure. Findings of this study, rooted in the evidence from China's stock markets, confirm that having a separate and effective monitoring organ results in a higher level of idiosyncratic risk, as long as the legal environment is sufficiently strong and the functionality of this separate monitoring organ is clearly defined. Effects of regulatory changes and ownership characteristics are addressed to help better understand the corporate governance--idiosyncratic risk relationship. Moreover, this study sheds light on timely global issues about information transparency and supervision, the lack of which becomes one of the major causes of the ongoing financial crisis, and presents an important challenge before corporate governance.

Suggested Citation

  • Zhenyu Wu & Yuanshun Li & Shujun Ding & Chunxin Jia, 2016. "A separate monitoring organ and disclosure of firm-specific information," The European Journal of Finance, Taylor & Francis Journals, vol. 22(4-6), pages 371-392, April.
    • Handle: RePEc:taf:eurjfi:v:22:y:2016:i:4-6:p:371-392
    DOI: 10.1080/1351847X.2012.762410
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    Cited by:

    1. Zhuo Li & Meiyu Tian & Guangda Ouyang & Fenghua Wen, 2021. "Relationship between investor sentiment and earnings news in high‐ and low‐sentiment periods," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2748-2765, April.
    2. Tzouvanas, Panagiotis & Kizys, Renatas & Chatziantoniou, Ioannis & Sagitova, Roza, 2020. "Environmental disclosure and idiosyncratic risk in the European manufacturing sector," Energy Economics, Elsevier, vol. 87(C).
    3. Monica Singhania & Dimple Gupta, 2024. "Impact of Environmental, Social and Governance (ESG) disclosure on firm risk: A meta‐analytical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3573-3613, July.

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