Research On The Influence Of The Annual Report Inquiry Letter Supervision On The Opportunistic Stock Selling Of Senior Executive

The Opportunistic stock selling of senior executives is the behavior of senior executives taking advantage of information or conducting information manipulation to reduce their holdings of company stocks and obtain excess returns in consideration of their own interests,which will damage the interests of the company and investors.Therefore,the suppression of opportunistic stock selling of senior executives has always been the focus of the capital market.The annual report inquiry letter is an innovative post-supervision means for the regulatory authorities to perform their duties and ensure the quality of information disclosure of listed companies.It plays an important role in corporate governance.As a non-punitive supervision method,the annual report inquiry letter supervision,on the one hand,has a certain information content,which can attract the attention of investors,promote the company to disclose more information and reduce the information advantage of senior executives.On the other hand,based on the characteristics of non-punitive supervision,the enforcement efficiency of the annual report inquiry letter supervision is not as high as the punitive regulation,and senior executives may use the information advantage of the response period to reduce their holdings.So since the implementation of China’s letter of inquiry supervision system,can the annual report inquiry letter supervision restrain the opportunistic stock selling of senior executives? Since the implementation of the registration system,we have adhered to the "combination of power delegation and tightened oversight",and supervision during and after the event has become increasingly important.So before and after the implementation of the registration system,is there any significant difference in the effect of the annual report inquiry letter supervision on the opportunistic stock selling of senior executives?Based on this,this paper takes the listed companies in Shanghai and Shenzhen A-share market that had directors,supervisors,senior executives and their relatives reduce their shareholding in the company from 2015 to 2021 as the research object to study the above issues.The research finds that the annual report inquiry letter supervision can restrain the opportunistic stock selling of senior executives to a certain extent;after the implementation of the registration system,the annual report inquiry letter supervision has a stronger inhibitory effect on the opportunistic stock selling of senior executives.In the mechanism analysis,this paper mainly selects the two indicators of corporate information disclosure quality and investors’ attention for verification.The results show that the annual report inquiry letter supervision can influence the opportunistic stock selling of senior executives by improving the quality of corporate information disclosure and increasing the investors’ attention.In terms of studying the joint effect of the annual report inquiry letter supervision and other governance mechanisms on the opportunistic stock selling of senior executives,this paper analyzes the heterogeneity characteristics of companies.The empirical results show that among non-state-owned enterprises,the companies audited by non-big four international and non-big eight domestic Accounting networks and associations and the enterprises with low attention from analysts,the annual report inquiry letter supervision on the opportunistic stock selling of senior executives suppression is more significant.It shows that the stronger the supervisory role of the annual report inquiry letter is when the other governance environment of the company is weak.Specifically,from the perspective of the breakdown characteristics of the annual report inquiry letter,this paper finds that when the inquiry letter involves a large number of questions,clearly indicates that the intermediary is needed to express its opinions,and the company delays the reply,the annual report inquiry letter supervision has a stronger inhibitory effect on the opportunistic stock selling of senior executives.In addition,through further analysis,this paper also finds that the annual report inquiry letter supervision can not only reduce the number and amount of the opportunistic stock selling of senior executives,but also significantly reduce the profitability of the opportunistic stock selling of senior executives.This paper theoretically enriches the relevant literature on the annual report inquiry letter supervision,the management of the opportunistic stock selling of senior executives and the implementation of registration system.In practice,it provides new evidence for the effectiveness of the annual report inquiry letter supervision after the implementation of the registration system,improves investors’ confidence in the comprehensive registration system,and provides a new idea for restraining the opportunistic stock selling of senior executives.