Research On The Impact Of Informal Board Hierarchy On The Quality Of Corporate Disclosure

Information disclosure by publicly traded companies is an important channel for stakeholders to access corporate information and is also a central element in promoting the healthy development of the capital market.If companies want to achieve high-quality development and gain advantages in the future transformation of science and technological innovation,they will be required to further improve the quality of their information disclosure.However,due to China’s special institutional environment and limited internal corporate governance capacity,listed companies have long had the problem of low-quality information disclosure.In recent years,disclosure scandals of listed companies in China have frequently emerged and some companies have been punished by the Securities Regulatory Commission for making high short-term profits through illegal means.Such behavior not only infringes on the interests of outside investors,but also damages the company’s image to some extent,to the detriment of its future development.The supervisory and advisory functions of the board of directors guide corporate behavior to exert a governance effect and thus have an impact on the quality of corporate disclosure.The informal board hierarchy is an informal system formed by differences in social capital and reputation among board members,who interact cooperatively to gain a better understanding of each other and thus form a relational contract that has an impact on corporate governance.Most current research on the role of the board of directors on corporate disclosure quality focuses on the role of the formal board system,but less on the impact of the informal system on disclosure quality.Therefore,this paper links the informal board hierarchy to corporate disclosure quality and examines the relationship between them in depth.The paper selects Shenzhen listed companies from 2011 to 2020 as the research sample,based on resource dependence theory,relational contract theory,information asymmetry theory and principal agent theory to explore the relationship between informal board hierarchy,internal control quality and disclosure quality,and incorporates the moderating role played by whether the chairman is at the highest level and the degree of marketization.The study concludes that the informal level of the board of directors can improve disclosure quality and that internal control plays a mediating role,that is,the informal level of the board of directors can have an impact on disclosure quality by improving the level of internal control in the company.Whether the chairman is at the top level plays a moderating role on the level of informal board and corporate disclosure quality,i.e.,the level of informal board has a more significant effect on the disclosure quality of companies with a lower chairman than those with a higher level chairman;the degree of commercialization plays a moderating role on the level of informal board and corporate disclosure quality,i.e.,the level of informal board has a more significant effect on the disclosure quality of companies with a lower chairman than those with a higher degree of commercialization.The positive effect of informal board hierarchy on the disclosure quality of firms in less market-oriented regions is more pronounced than that of firms in more market-oriented regions.Through the above findings,this paper provides suggestions to reduce information asymmetry and protect the interests of small and medium shareholders and outside investors,and provides some test evidence for market regulators to formulate reasonable corporate disclosure policies.