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Do board secretaries with financial expertise reduce regulatory inquiries? Empirical evidence based on the China stock exchange’s annual report comment letter
oleh: Yi Quan, Cong Zhou, Rongjiang Bao, Li Long
Format: | Article |
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Diterbitkan: | Taylor & Francis Group 2022-06-01 |
Deskripsi
The number of annual report comment letters (ARCLs) has been increasing over the years with the stock exchanges continuously strengthening ex-post supervision. Focusing on the financial expertise of board secretaries, who are directly responsible for disclosure, we thoroughly explore whether such expertise can impact regulatory inquiries. We document that financial expert board secretaries significantly reduces the likelihood, frequency, and characters of firms’ receipt of ARCLs and the likelihood of firms’ delay of responses to ARCLs. Further, we find that the influence of financial expert board secretaries on ARCLs mainly exists in the non-state-owned enterprises, enterprises with a poor governance environment, and enterprises in which board secretaries enjoy a higher organizational status. The mechanism test results show that financial expert board secretaries can reduce the accrual-based earnings management. Overall, this research reveals board secretaries’ disciplinary effects on regulatory inquiries and provides detailed analysis helping understand board secretaries’ role in disclosure.