Abstract: |
We conduct a field experiment by sending appeals for the enforcement of disclosure violations through a public channel established by local securities regulatory bureaus in China. Our findings indicate that 38.94% of the treatment firms—those receiving our appeals to the local bureaus—correct the violation through restatement, compared to only 4.95% of the control firms—those not receiving our appeals. The treatment effect is significantly stronger when we claim that we also informed the central government securities regulator; however, there is no notable difference when we assert that we engaged with social media, suggesting that local bureaus respond more strongly to pressures from central regulators. Additionally, our evidence shows that the treatment effect is more pronounced for non-SOEs than for SOEs, and for local bureaus in less marketized provinces compared to more marketized ones, even after controlling for the materiality of the disclosure violation. Taken together, these results suggest that local bureaus respond to investors’ appeals to enforce disclosure violations, but their enforcement actions may be influenced by political pressures from both local and central governments.
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Biography:
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T.J. Wong is an expert on accounting and corporate governance in emerging markets. He has published numerous articles in top accounting and finance journals. He has served as an editor for The Accounting Review and the associate editor of Management Science, and in the editorial board of several accounting journals. His research is frequently featured in media outlets including the Wall Street Journal, The Economist, The Globe and Mail and South China Morning Post. Prior to joining USC, he served as the Dean of the CUHK Business School from 2008 to 2013.
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