Browsing by Subject "Legibilidad de los estados financieros"

Now showing 1 - 1 of 1
  • Thumbnail Image
    Publication
    Open Access
    Political Connections and Readability of Financial Statements: Evidencefrom China
    (Universidad de Murcia, Servicio de Publicaciones, 2024) He, Kang; Chen, Wanyi; Zhang, Liguang; Zhou, Yankun
    High-quality information disclosure improves the accuracy of investors’ judgment and efficiency in resource allocation. With a focus on the readability of information disclosed, this study analyzes how political connections affect the readability of financial statements by taking A-share private-owned companies listed onShanghai and Shenzhen Stock Exchanges as research sample from 2008 to 2019. We use ordinary leastsquares model and moderating effect model as our main methodology. A series of robustness tests are alsocarried out. Our research finds that companies with political connections are more likely to issue less read-able financial statements. This negative impact is diminished for the firms with a higher marketization level,better corporate governance, and greater analyst coverage. Further research on the economic consequences demonstrates that political connections would weaken the positive effect of the readability of financial state-ments on the firm’s future market value. This study enriches the research on the factors influencing the readability of financial statements and reveals the economic consequences of political connections in termsof textual information disclosure quality. It is therefore an important reference for regulatory authoritiesto formulate guidelines on text information disclosure and supervise the compliance of politically affiliated enterprises, while facilitating listed companies to enhance the readability of their financial statements