Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters

Based on a sample of Chinese A-share listed firms from 2015 to 2018, this paper studies the impact of annual report comment letters (ARCLs) on firm stock price synchronicity. We find that after firms receive ARCLs, their stock price synchronicity decreases. Moreover, the longer the ARCLs and the mor...

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Autores principales:	Xiaomin Hao, Yonghai Wang
Formato:	article
Lenguaje:	EN
Publicado:	Elsevier 2021
Materias:	Preventive Regulation Annual Report Comment Letters Stock Price Synchronicity Information Asymmetry Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/45bce1edfab04b94aabf79760f8e81d4
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id	oai:doaj.org-article:45bce1edfab04b94aabf79760f8e81d4
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spelling	oai:doaj.org-article:45bce1edfab04b94aabf79760f8e81d42021-11-26T04:25:51ZDoes preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters1755-309110.1016/j.cjar.2021.07.001https://doaj.org/article/45bce1edfab04b94aabf79760f8e81d42021-12-01T00:00:00Zhttp://www.sciencedirect.com/science/article/pii/S175530912100037Xhttps://doaj.org/toc/1755-3091Based on a sample of Chinese A-share listed firms from 2015 to 2018, this paper studies the impact of annual report comment letters (ARCLs) on firm stock price synchronicity. We find that after firms receive ARCLs, their stock price synchronicity decreases. Moreover, the longer the ARCLs and the more negative the ARCLs’ tone, the lower the resulting stock price synchronicity. The mechanism test shows that after firms receive ARCLs, the firms’ information disclosure increases in quantity and quality, external media attention increases, and the firms’ governance improves, reducing their stock price synchronicity. Further research shows that this negative association is more significant in firms with higher information asymmetry. This paper shows that the ARCL, an innovative application of the capital market supervision philosophy, is conducive to improving the quality of listed firms and to the healthy development of the capital market.Xiaomin HaoYonghai WangElsevierarticlePreventive RegulationAnnual Report Comment LettersStock Price SynchronicityInformation AsymmetryAccounting. BookkeepingHF5601-5689ENChina Journal of Accounting Research, Vol 14, Iss 4, Pp 100203- (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Preventive Regulation Annual Report Comment Letters Stock Price Synchronicity Information Asymmetry Accounting. Bookkeeping HF5601-5689
spellingShingle	Preventive Regulation Annual Report Comment Letters Stock Price Synchronicity Information Asymmetry Accounting. Bookkeeping HF5601-5689 Xiaomin Hao Yonghai Wang Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters
description	Based on a sample of Chinese A-share listed firms from 2015 to 2018, this paper studies the impact of annual report comment letters (ARCLs) on firm stock price synchronicity. We find that after firms receive ARCLs, their stock price synchronicity decreases. Moreover, the longer the ARCLs and the more negative the ARCLs’ tone, the lower the resulting stock price synchronicity. The mechanism test shows that after firms receive ARCLs, the firms’ information disclosure increases in quantity and quality, external media attention increases, and the firms’ governance improves, reducing their stock price synchronicity. Further research shows that this negative association is more significant in firms with higher information asymmetry. This paper shows that the ARCL, an innovative application of the capital market supervision philosophy, is conducive to improving the quality of listed firms and to the healthy development of the capital market.
format	article
author	Xiaomin Hao Yonghai Wang
author_facet	Xiaomin Hao Yonghai Wang
author_sort	Xiaomin Hao
title	Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters
title_short	Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters
title_full	Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters
title_fullStr	Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters
title_full_unstemmed	Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters
title_sort	does preventive regulation reduce stock price synchronicity? evidence from chinese annual report comment letters
publisher	Elsevier
publishDate	2021
url	https://doaj.org/article/45bce1edfab04b94aabf79760f8e81d4
work_keys_str_mv	AT xiaominhao doespreventiveregulationreducestockpricesynchronicityevidencefromchineseannualreportcommentletters AT yonghaiwang doespreventiveregulationreducestockpricesynchronicityevidencefromchineseannualreportcommentletters
_version_	1718409898163699712

Does preventive regulation reduce stock price synchronicity? Evidence from Chinese annual report comment letters

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