Topic: Public Enforcement of Securities Laws in Weak Institutional Environments: Evidence from China
Speaker: Kai Li, University of British Columbia
Time: Wednesday, 24 July,13:30-15:00
Location: Room 217, Guanghua Building 2
China presents a unique opportunity to study an increase in public enforcement of mandatory disclosure when private enforcement is largely absent. Using a hand-collected sample of comment letters (CLs) on annual reports issued by the Shanghai Stock Exchange, we first show that the price reaction to CL announcements is negative and significant, and that targeted firms are more likely to amend their annual reports compared to firms not in receipt of CLs. However, we find no significant effect of the Exchange’s increased enforcement on targeted firms’ disclosure quality, nor do we find any evidence of market discipline in terms of higher costs of capital for those firms. Finally, we show that targeted firms, especially those receiving more severe CLs, are more likely to receive CLs in the future and are also more likely to be sanctioned by the regulators. We conclude that an increase in public enforcement does not achieve its intended objectives in weak institutional environments.
Dr. Li is Senior Associate Dean, Equity and Diversity, Professor of Finance, and holds the W. Maurice Young Endowed Chair in Finance at the UBC Sauder School of Business, University of British Columbia.
Dr. Li’s research focuses on the economic consequences of corporate governance mechanisms. Her current research projects explore: (1) the value drivers of mergers and acquisitions, (2) machine learning in finance, and (3) the roles of culture and psychology in corporate decisions. Her research has appeared in Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Financial and Quantitative Analysis, Management Science, Journal of International Business Studies, and many other leading journals in Finance and Economics. She is the recipient of the 2014 UBC Killam Research Award, the 2008 Sauder School of Business Research Excellence Award, the 2002 Barclays Global Investors Canada Research Award, and the Best Paper Award at many international conferences. She is on the Editorial Board of Review of Financial Studies, Review of Finance, Journal of Financial and Quantitative Analysis, Management Science, Journal of Corporate Finance, Journal of Financial Stability, and Journal of Banking and Finance. Her research has been featured in Wall Street Journal, New York Times, Washington Post, Financial Times, The Time Magazine, Reuters, CNBC, Bloomberg, Dow Jones Newswire, New Yorker, BBC, BNN, CBC National, National Post, Globe and Mail, U.S. News & World Report, Harvard Business Review, and Yahoo! Finance.
Your participation is warmly welcomed!