What Is a Mandatory Disclosure?

Voluntary information disclosure refers to information disclosed by listed companies on the basis of company image, investor relations, and avoidance of litigation risks, in addition to mandatory disclosure, such as managers' evaluation of the company's long-term strategy and competitive advantage, and environmental protection And community responsibility, the company's actual operating data, forward-looking forecast information, and corporate governance effects, etc., the autonomy of managers is the biggest feature of a voluntary information disclosure system.

Voluntary disclosure

1. profit speculative information ^[1]

1. Principal-agent theory ^[1]

1. Enterprise autonomy. ^[2]

1. Promote the improvement of corporate governance structure. Voluntary information disclosure can enable the majority of small and medium shareholders to obtain more information about the company's operations, and reduce serious information asymmetry between large and small shareholders. At the same time, creditors can learn more about the status of the enterprise and can effectively promote the improvement of the governance structure of the enterprise. Ullman (1985) research found that the improvement of the quality of voluntary information disclosure can weaken the exploitation of creditors by shareholders, and the rights and interests of creditors can be better protected, so that the higher the proportion of corporate claims in the capital structure, the greater the creditor governance The more effective. Empirical research confirms that corporate governance variables such as the separation of non-executive directors, chairman and general manager, and the role of external audit are significantly related to the quality of voluntary information disclosure. ^[2]

At present, China's information disclosure mechanism is dominated by compulsory disclosure, supplemented by voluntary disclosure. In reality, the voluntary information disclosure of listed companies in China, whether in terms of content or quality, is far from meeting the requirements of regulatory authorities, securities professionals and investors. Most listed companies are only willing to disclose information in accordance with the minimum requirements of securities regulations. Even voluntary disclosures go by. In the years and years of listed companies, many of them are uncertain and easily lead to misunderstanding. In short, most listed companies choose to disclose qualitative, marginal, peripheral, and superficial information, and avoid those core, critical, and quantitative information, thereby greatly weakening the relevance of the information. The main reasons are: ^[1]

Voluntary information disclosure is not directly interfered by the government and the law, it is inevitable that certain information deviations will be formed, which will create market noise. While encouraging the promotion and strengthening of the voluntary information disclosure system of listed companies, a mechanism should be established to effectively control information deviations and improve the quality of voluntary information disclosure. In light of China's actual situation, we can take measures in the following areas. ^[3]

The information disclosure system of listed companies in mainland China is mainly based on mandatory information disclosure, supplemented by voluntary information disclosure. Voluntary information disclosure as a supplementary system does not indicate that the quality of voluntary information disclosure is not high and is not protected by law. On the contrary, because voluntary disclosure is the active communication between listed companies and investors, it often has a certain reference value. In addition, the relevant clauses in the "Content and Format Guidelines for Information Disclosure of Publicly Offered Stock Companies" promulgated by the China Securities Regulatory Commission, No. 1-6, "not limited to this", is to leave a certain amount of room for listed company information disclosure. ^[4]

To a certain extent, the degree of information disclosure in a country's securities market can be used to measure the development of the country's securities market. Voluntary information disclosure, as a supplement and deepening of mandatory information disclosure, is of great significance for improving the level of voluntary information disclosure of listed companies and demonstrating the future value of the company. ^[4]

1. Vigorously develop the stock option system and cultivate the manager market

When management's compensation is linked to the performance of the secondary market stock price, management has an incentive to actively disclose company information. Therefore, the development of stock option system can not only establish an appropriate incentive mechanism for operators, but also help increase the amount of information in the stock market. At the same time, the competition of corporate control can exert external pressure on the company's managers. A strong manager market helps company managers to maximize the interests of shareholders, exert their management skills, and weaken the contradiction of "agent-agent". In terms of information disclosure, they can also pay more attention to the performance of the secondary market stock price, voluntarily disclose more valuable information, and guide the stock price to the right direction.

2. Vigorously develop institutional investors

The development of institutional investors is conducive to changing the situation of China's relatively high concentration of equity.It can pool the capital of many small shareholders to form a strong investment strength, protect the legitimate interests of small and medium shareholders from infringement, and promote more disclosure by management. information.

3. Securities regulatory authorities should encourage and regulate the voluntary disclosure of predictive financial information by listed companies

The "Company Law" and "Securities Law" clearly stipulate that listed companies must provide predictive financial information and voluntary provision of predictive financial information, and clearly define and define the responsibilities of listed companies in preparing and reporting predictive financial information and the CPA Compile and review responsibilities, and establish predictive financial information insurance and compensation systems to ensure the quality of predictive financial information.

4. Give full play to the role of market intermediaries and establish an authoritative company information disclosure quality evaluation system

The information disclosure quality rating is a comprehensive evaluation made by the market intermediary agency based on its professional knowledge and full understanding and analysis of the company's internal information to warn the market risks that ordinary investors may face. As market intermediaries, CPAs have accounting expertise not available to ordinary investors, and their evaluation opinions on the company's profit forecast information actually provide investors with some form of "guarantee". The stock exchange may regularly check the quality of voluntary information disclosure by listed companies and disclose the inspection results.

5. Actively create a good environment for news and public opinion

The purpose of actively creating a good news environment is not only to strengthen the information connection with listed companies, but also to strengthen social supervision. News reports are an important channel for listed companies to voluntarily disclose information, and the active contact of the press with listed companies can reveal more useful information. At present, some websites designated by the CSRC are establishing integrity files for listed companies, which can take into account the status of voluntary information disclosure by listed companies.