The Study On Market Competition And Discretionary Disclosure Decision Of Listed Companies

As the behavioral basis of the market publicity principle, Information disclosure has been the underlying belief and motivation headstream of modern capital market, and it is also one of the top ends of modern financial economic theories. As the main subjects of the market, corporations' information disclosure and its transparency have been the core content of the stock market information publicity system and one of the key issues of modern corporate financial theories.This paper tries to use reference and synthetic research productions about discretionary disclosure. And I attempted to construct a logical theoretical system by myself. Following such study clue, I gradually introduced the factors that should be taken into account in discretionary disclosure and integrated all the theories in a frame. Firstly, I introduced the concept of "proprietary cost" and analyzed the level and strategies of disclosure which were taken by firms. Then, I brought into the product market competition factors, analyzed the different disclosure strategies under different competition environments. Finally, I took the financial competition factors into account and explained why actually not all the firms keep to the strategies under product market competition and why sometimes the discretionary disclosure appears to take on some characteristics of "herding".The most important contributions of this paper are the empirical studies both under the product market and financial market competition environments. In the former situation, I used CLM index advised by Kedia as the measure of the competition strategy. And I used the data of componential companies of Shanghai Stock Index 180 to test the relations between the disclosure decisions and the companies' competition strategies. The results proved that the production competition companies will disclose more, and the price competition companies will disclose less.When analyzing the latter situation, I chose to use the capital expenditure forecasts as the representative of discretionary disclosure. I used the classicalconsecutive time model of event history study------Cox Proportional Risk Model,and the result turned out to be that the listed companies do "herding" when they make disclosure decisions. It means that when making discretionary disclosure, listed companies of China take both product market competition factors and financial market competition factors into account. I gave out some advice based on the results above in the last part of the paper.