Forward-looking disclosure effects on stock liquidity in China: Evidence from MD&A text analysis

IF 7.5 1区经济学 Q1 BUSINESS, FINANCE International Review of Financial Analysis Pub Date : 2024-07-26 DOI:10.1016/j.irfa.2024.103484

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Abstract

We investigate the impact of forward-looking disclosures in annual reports on stock liquidity in China. Analysis of the MD&A sections within annual reports demonstrate a strong positive correlation between forward-looking disclosures and a company's stock liquidity. This promotional effect appears more pronounced within high-tech companies and those with lower levels of information transparency. Mechanistic tests indicate that the increase in equity liquidity attributable to forward-looking disclosures can be traced to heightened interest from analysts and media coverage. Further examination of the impact of MD&A textual characteristics reveals that improvements in the readability and tone of the text strengthen the effect of forward-looking information on enhancing stock liquidity. Economic consequence tests show that forward-looking disclosures not only enhance stock liquidity but also contribute to expanding investment scale, reducing financing costs, and improving both future firm performance and market valuation. These findings suggest that augmenting the efficiency of capital market information dissemination could significantly bolster financial support for the real economy.

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前瞻性信息披露对中国股票流动性的影响：MD&A 文本分析的证据

我们研究了年报中前瞻性信息披露对中国股票流动性的影响。对年报中MD&A部分的分析表明，前瞻性信息披露与公司股票流动性之间存在很强的正相关性。这种促进效应在高科技公司和信息透明度较低的公司中更为明显。机制测试表明，前瞻性信息披露对股票流动性的提高可以追溯到分析师兴趣的提高和媒体的报道。对MD&A文本特征影响的进一步研究表明，文本可读性和语气的改善加强了前瞻性信息对提高股票流动性的作用。经济后果检验表明，前瞻性信息披露不仅能提高股票流动性，还有助于扩大投资规模、降低融资成本、改善公司未来业绩和市场估值。这些研究结果表明，提高资本市场信息传播效率可以极大地增强金融对实体经济的支持。

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来源期刊

International Review of Financial Analysis BUSINESS, FINANCE-

CiteScore

10.30

自引率

9.80%

发文量

366

期刊介绍： The International Review of Financial Analysis (IRFA) is an impartial refereed journal designed to serve as a platform for high-quality financial research. It welcomes a diverse range of financial research topics and maintains an unbiased selection process. While not limited to U.S.-centric subjects, IRFA, as its title suggests, is open to valuable research contributions from around the world.