An Empirical Research On The Relationship Between Capital Structure And Quality Of Information Disclosure In Listed Companies Of China

The information disclosed by listed companies is the bridge to contact listed companies and investors, but also the hub of the securities market; The quality of information disclosed not only affects investors to make rational investingt decisions, but also contributes to the survival of listed companies in the stock market which is full of competition, also, to a large extent, it can affect the efficiency and steady development of the securities market. Therefore, study on the quality of information disclosure is not only the key-point which supervision department, academia and investors should pay attention to, but also the hot topic for further regulating information exposure and perfecting information exposure supervision system.But in recent years, the quality of information disclosure of listed companies is not high, the situation has hindered the development of securities markets in China and has became a prominent economic issue all over the world. This thing not.only shows there are still more issues in the quality of information disclosure, but also reflects we need do more to prove the governance of listed companies in China. The capital structure of listed companies as a "gene", plays a decisive role on corporate governance, obviously, there is also close relationship between capital structure and quality of information disclosure. To a large extent, capital structure contains the formation of capital and the mutual relations of its formation, which includes the ownership structure and debt structure. Many scholars are committed to this research and achieves fruitful results, but there are also many problems:firstly, only studying the relationship between the ownership structure and the quality of information disclosure or viewing the ownership structure as a part of corporate governance, studying the relationship between the corporate governance and the quality of information disclosure, there are also many controversial conclusions, and in these studies, there are less studies related the debt structure of the relationship and the quality of information disclosure. Secondly, because of the special status of the system background, specially the capital structure of listed companies in China is significantly different from that in foreign countries, the results of foreign research are difficult to explain the situation China. And our research, particularly empirical research, often based on the data of pre-split share structure reform, it is difficult to explain the current situation. Therefore, from the point of view of capital structure which is divided into three parts:the ownership structure, debt structure and the degree of financial leverage, to give a systematic, comprehensive study on the relationship between the capital structure of listed companies and the quality of information disclosure, explore how each part impacts the quality of information disclosure. In this way, I believe that research on information disclosure of listed companies in China will has a positively practical and theoretical knowledge meaning.In the process of this research, combined with measurement of econometric models to analyze the status of information disclosure of companies listed in the market of Shenzhen Stock Exchange, we divide capital structure into three parts: the ownership structure, debt structure and the degree of financial leverage, analyze how each part affects the quality of information disclosure. The paper mainly uses empirical research, supplemented with normative research.In this paper, there are two parts:the part of theory analysis and the part of empirical research. In the part of theory analysis, firstly, the paper recounts the importance of quality of information disclosure.of listed companies, proposes the issue the article will study. Then the paper reviews and sorts out relevant research to determine the direction, framework and content of this research. Secondly, this study defines two key concepts:capital structure and information disclosure of listed companies, after a detailed analysis of the theory of capital structure, analyzes each part of capital structure how affects information disclosure. And at last, this paper gives a description of the concrete situation about the quality of information disclosure of listed companies in Shenzhen Stock Exchange from the point of authenticity, adequacy and timeliness. Empirical part includes:firstly, the paper gives descriptive statistics about the whole quality of information disclosure of listed companies in Shenzhen Stock Exchang, analyzes each part of capital structure how to affects information disclosure, underly the assumptions and build regression models. Then, on the basis of t he result, the paper makes relevant policy recommendations. At last, after reviewed this study, summarizes and analyzes the shortcomings of the study and follow-up study needed. This paper makes a systematic research on factores influencing information disclosure from three points:ownership structure, debt structure and the degree of financial leverage, its contributions as followes:This paper reviews the relevant studies, believe that information disclosure is not just a means of corporate strategy or behavior, the most fundament behind the listed company is capital structure, from this deeper level, analyze the relationship between the quality of information disclosure and capital structure which is divided into three levels of concrete. The study about this field is few at home and abroad, especially from the point of the debt structure and utilization level of financial leverage. This paper enriches the empirical research of this field, its relevant research results are applicable to listed companies in China, the specific results are as follows:(1) From the point of the nature of controlling shareholders, compared with non-state-owned companies, the quality of information disclosure of state-owned companies is higher. Maybe it’s due to imperfect legal system in China, under the present conditions, state-owned listed companies not only be supervised by the external audit, but also be accepted from the government’s strict regulatory system, compared with non-state-owned companies, overall quality of information disclosure of these companies is higher.(2) The higher circulation of equity, the more improvement in the quality of information disclosure, because, although the holders of tradable shares are mostly minority shareholders, although they lack of advantages of direct impact on corporate governance and specific acts, but only they have the "vote by foot". They can make timely indirectly reflect on performance, prospects of company by the way of holding or not holding stock. However, this is not evident in our country, it’s maybe due to the special institutional arrangements in China: "dominance by major shareholders" phenomenon is more serious and it’s difficult to have obvious results in a short time after the reform of ownership of shares.(3) The focus of shares will lead to two extreme concentration:the "free rider" phenomenon and the "empty" behavior, the dispersion of equity weakenes the direct supervision to the management, they prefer to performance as "free riders" in corporate governance. The excessive concentration of shares would result in two effects:the convergence of interest effect and the interests of the occupation effect, as the intrest be tween major shareholders and minority shareholders is not always the same, so in most cases, the interests of the occupation effect is obvious. Therefore, the percentage of controlling shares is not the higher, the better. It proves that the current controlling shares will help to improve the quality of information disclosure of listed companies in China. Except of the concentration of shares, the other point is:major shareholders not only play as "devils", but sometimes like angels in corporate governance. When the first big shareholder’s intrest is consistent with corporate goals, they will carry out effective supervision of the company to improve the quality of information disclosure.(4) The balance between shareholders is different from expectation, its result proves that from the second did not carry out effective supervision to the largest shareholder, one possible explanation is that the higher ratio the second to the fifth-largest shareholder have, the easier they take "empty behavior" using illegal behavior. The other possible explanation is that when other shareholders make a choice between higher costs and internal governance, they will turn to external governance for help, use their information advantage to reduce information asymmetry in cooperation with external supervision. The higher of this supervision, the more problems will be discovered, so this supervision seems to have a "negative impact" on quality of information disclosure.(5) The more liabilities the corporate has, the more likely reduce the quality of information disclosure, because the company will face greater financial pressure and operational risk, in order to obtain the trust of creditors and stakeholders, they may choose to postpone or illegal disclosure information, In the liability’s internal structure, the long-term and short-term debt ratio do not pass the significance test, it shows that the quality of information disclosure is only related with company’s overall debt situation, not with internal structure of debt.(6) Debt equity ratio did not pass the significance test, it maybe partly due to the special financial preference in China: firstly, equity financing, then, debt financing and finally, internal financing. All these result debt capital is not high, the control of creditors in corporate governance is often weak, ont making a rigid constraint on business.Because of the limitation of author’s academic knowledge and some objective restriction, in this paper, there are some shortcomings: (1) Using the level of the quality of information disclosed by Shenzhen Stock Exchange has some limitations:because the Shenzhen Stock Exchange disclosed only "excellent", "Good", "pass"and "fail" four grades, this classification is more general that can not provide detailed status or quality.(2) The paper based on the date of Shenzhen Stock Exchange, so we can not kown the status of the quality of information disclosure and the relationship between capital structure and quality of information disclosure in Shanghai Stock Exchange.(3) Information disclosure of listed companies is more complicated, the models to measure should include more variables, obviously, this paper should includs more.(4) Certainly different industries with different capital structure, the research about capital structure should in different industries would be more accurate, but due to the limit sample, it does not work.(5) Companies listed on different board, their quality of information is significantly different, this paper although includes the character of the board, but not make a comparison between different board, ao there is no further relevant conclusions.