Do voluntary positive earnings forecasts of Chinese listed companies benefit publicly or privately?

Do voluntary positive earnings forecasts of Chinese listed companies benefit publicly or privately? PurposeAccording to the Chinese Stock Exchange rules, the listed companies’ management earnings forecasts (MEFs) are divided into mandatory and voluntary earnings forecasts. Different information disclosure mechanisms may bring different economic consequences. Compared with the former, when, how frequently and what kind of voluntary earnings forecasts are disclosed almost entirely depends on the discretion of managers and the major shareholders[1]. The purpose of this paper is to examine whether listed companies’ voluntary earnings forecasts have self-benefited motives before the major shareholders’ selling of original non-tradable shares and how the capital market reacts in China.Design/methodology/approachThis paper uses multiple regression analyses to examine the influence of the major shareholders’ non-tradable shares selling motives on MEFs’ type and frequency of A-share listed companies and makes robust tests using the difference in difference model (DID).FindingsIn the paper, it is found that before the major shareholders’ selling of original non-tradable shares, managers of listed companies are prone to release positive voluntary MEFs; during the shares reduction year of the major shareholders, the disclosure frequency of MEFs is much higher; these forecasts before the major stockholders’ selling have significant higher excess market returns. The evidence suggests that voluntary positive MEFs are for the major shareholders’ self-interested motive rather than for the open, fair and just disclosure purpose that damages the allocation efficiency of the capital market.Originality/valueThis paper enriches the understanding of voluntary MEFs’ incentives literature and provides scientific evidence to improve the supervision of information disclosure and insider trading in Chinese security market. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Nankai Business Review International Emerald Publishing

Do voluntary positive earnings forecasts of Chinese listed companies benefit publicly or privately?

Loading next page...
 
/lp/emerald/do-voluntary-positive-earnings-forecasts-of-chinese-listed-companies-QJ0ROHlo2y
Publisher
Emerald Group Publishing Limited
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
2040-8749
D.O.I.
10.1108/NBRI-07-2017-0038
Publisher site
See Article on Publisher Site

Abstract

PurposeAccording to the Chinese Stock Exchange rules, the listed companies’ management earnings forecasts (MEFs) are divided into mandatory and voluntary earnings forecasts. Different information disclosure mechanisms may bring different economic consequences. Compared with the former, when, how frequently and what kind of voluntary earnings forecasts are disclosed almost entirely depends on the discretion of managers and the major shareholders[1]. The purpose of this paper is to examine whether listed companies’ voluntary earnings forecasts have self-benefited motives before the major shareholders’ selling of original non-tradable shares and how the capital market reacts in China.Design/methodology/approachThis paper uses multiple regression analyses to examine the influence of the major shareholders’ non-tradable shares selling motives on MEFs’ type and frequency of A-share listed companies and makes robust tests using the difference in difference model (DID).FindingsIn the paper, it is found that before the major shareholders’ selling of original non-tradable shares, managers of listed companies are prone to release positive voluntary MEFs; during the shares reduction year of the major shareholders, the disclosure frequency of MEFs is much higher; these forecasts before the major stockholders’ selling have significant higher excess market returns. The evidence suggests that voluntary positive MEFs are for the major shareholders’ self-interested motive rather than for the open, fair and just disclosure purpose that damages the allocation efficiency of the capital market.Originality/valueThis paper enriches the understanding of voluntary MEFs’ incentives literature and provides scientific evidence to improve the supervision of information disclosure and insider trading in Chinese security market.

Journal

Nankai Business Review InternationalEmerald Publishing

Published: Mar 5, 2018

There are no references for this article.

You’re reading a free preview. Subscribe to read the entire article.


DeepDyve is your
personal research library

It’s your single place to instantly
discover and read the research
that matters to you.

Enjoy affordable access to
over 18 million articles from more than
15,000 peer-reviewed journals.

All for just $49/month

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off