Share pledges, tone of earnings communication conferences, and market reaction: evidence from China

We investigate how share pledging affects firms’ disclosures and influences investors in Chinese stock market. The tone of firm disclosures when there are shares pledged by controlling shareholders is more positive than that of firms without them. Considering tone inflation motivation and ability si...

Full description

Saved in:
Bibliographic Details
Published inAccounting and finance (Parkville) Vol. 59; no. 5; pp. 2817 - 2853
Main Authors Zhao, Wanlong, Zhang, Wei, Xiong, Xiong, Zou, Gaofeng
Format Journal Article
LanguageEnglish
Published 01.12.2019
Subjects
Earnings communication conferences
Market reaction
Share pledges
Tone
Online AccessGet full text

Cover

More Information
Summary:We investigate how share pledging affects firms’ disclosures and influences investors in Chinese stock market. The tone of firm disclosures when there are shares pledged by controlling shareholders is more positive than that of firms without them. Considering tone inflation motivation and ability simultaneously, we find share pledge risk has an inverted U‐shaped relation with tone. Investors react positively to tone in short‐run windows, and firms with controlling shareholders’ pledges have higher stock returns for earnings communication conferences. We identify an inverted U‐shaped link between margin distance of controlling shareholders and stock returns for earnings communication conferences.
ISSN:0810-5391
1467-629X
DOI:10.1111/acfi.12585