CSRC Oral Communication and Corporate Disclosure

Chenxue Hou* and Qijian Wang**

Abstract

Oral communication has increasingly been used as a policy tool by the China
Securities Regulatory Commission (CSRC) to regulate the Chinese financial market.
However, less is known about whether and how this newly developed policy tool affects
corporate decisions. Using machine-learning techniques, this paper develops a measure
to evaluate the CSRC’s oral emphasis on financial disclosure based on scripts of its
press conferences and official speeches. We find that the CSRC’s underscore of
disclosure improves both the quantity and quality of corporate disclosure. Further
evidence suggests that listed firms with financing needs respond more to the CSRC oral
communication. Moreover, under political pressure, state-owned enterprises (SOEs)
comply more with the CSRC oral communication in terms of disclosure quantity but
not disclosure quality.

JEL classification: G14, G18, G32, G34

Keywords: oral communication, regulatory commission, corporate disclosure, machine
learning

* Assistant professor of Economics, Lingnan College, Sun Yat-sen University, Guangzhou, China, email:
houchx5@mail.sysu.edu.cn
** Assistant professor of Finance, Lingnan College, Sun Yat-sen University, Guangzhou, China, email:

wangqj8@mail.sysu.edu.cn
We are grateful for helpful comments and advice from Hui Chen, Yun Dai, seminar participants from Lingnan
College, Feng Gao from Guangfa Securities, and Yipin Xu from Anxin Securities. We also thank our research
assistants Junyao Wang and Ruijie Xu. All remaining errors are our own.
1. Introduction

On April 2nd, 2020, the stock price of Luckin Coffee plummeted by 80% after the

firm admitted to fabricating 2.2 billion yuan (approximately $310 million USD) in sales.

Since such fake disclosure-related events heavily damage the reputation of Chinese

firms, how to improve and better monitor corporate disclosure have once again become

important and urgent tasks for Chinese security regulators to undertake. Basically,

regulators have two ways by which to discipline public firms: mandatory regulations

and non-mandatory oral communication. Prior literature has mainly studied the impact

of mandatory regulations on corporate decisions. In terms of non-mandatory oral

communication, most studies have focused on the impact of central bank oral

communication on the macroeconomy. One promising yet unexplored area is how oral

communication from the security regulatory commission affects the behavior of listed

firms. In this paper, we study the impact of the China Securities Regulatory

Commission (CSRC) oral communication on corporate disclosure behavior.

There are two reasons to explore the impact of the CSRC oral communication. First,

the CSRC, unlike the Securities and Exchange Commission (SEC), plays a critical role

in determining financing decisions (i.e., initial public offerings, seasoned equity

offerings, and debt) via an approval system for China’s financial markets. Second, the

CSRC holds a press conference every week, which provides us with fruitful resources

for analyzing its impact, while the SEC holds no regular press conference.

Overall, the CSRC has two oral communication channels: press conferences and

public speeches. Since June 2013, the CSRC has held a press conference every Friday
afternoon. In each press conference, the CSRC usually articulates or demonstrates

financial policies, publicizes the penalties for listed firms, collects feedback from the

public, and responds to reporters’ questions. The other oral communication channel is

through public speeches by heads of the CSRC in forums or conferences for the purpose

of delivering the CSRC’s work focus and clarifying its recent policies.

Given the various topics covered in press conferences and speeches, we choose to

focus on corporate disclosure for two reasons: 1) the primary objective of the CSRC is

to improve the information disclosure environment and alleviate information

asymmetry, and 2) “disclosure” is the most frequently mentioned word in the transcripts

of CSRC press conferences and speeches. Therefore, it is meaningful and necessary to

explore whether the CSRC’s emphasis on disclosure affects corporate disclosure

behavior.

To quantitatively measure CSRC oral communication on corporate disclosure, we

collect the transcripts of press conferences 1 and official speeches 2 from its official

website. The raw files include the transcripts of 275 press conferences and 237 official

speeches from January 2014 to December 20193. Based on these files, we then construct

a measure of the CSRC’s emphasis on disclosure using machine learning techniques.

Following the word2vec method (Mikolov et al. 2013), we first train a neural network

model to learn the meanings of all unique words in the transcripts based on their

1 We crawl all press conference transcripts from the press conference section of the CSRC’s official website,
available at http://www.csrc.gov.cn/pub/newsite/zjhxwfb/xwfbh/.
2 We crawl all transcripts from the new release section of the CSRC’s official website, available at

http://www.csrc.gov.cn/pub/newsite/zjhxwfb/xwdd/, and select those transcripts involving speeches, lectures,

forums, statements, reports, meetings, and answering reporters’ questions.
3 As it takes times for listed firms to become used to the CSRC’s press conferences, our data starts from January

2014, leaving half a year for market participants to adjust their behaviors. Since, in 2020, regular press conferences
were suspended due to COVID-19, our data ends in December 2019.
contexts and transform the words into numeric vectors. Second, treating “disclosure”

as the seed word (Li et al. 2021), we construct a “disclosure dictionary”, including

words and phrases close to the seed word “disclosure” 4 . This method allows us to

identify words such as symmetry, finance, and authenticity and phrases such as

corporate finance and core content, which are strongly associated with the seed word

“disclosure”. Finally, the CSRC’s oral emphasis score on disclosure is constructed

based on a weighed-frequency count of the words and phrases in the “disclosure

dictionary” from the transcripts of press conferences and official speeches.

After constructing the measure of the CSRC’s oral emphasis on disclosure, we

investigate its impact on corporate disclosure behavior from two perspectives:

disclosure quantity and disclosure quality. To measure disclosure quantity, we consider

the total number of corporate announcements and of irregular corporate announcements.

To measure disclosure quality, we employ earnings management based on the Jones

model (Jones 1991) and the modified Jones model (Dechow, Sloan, and Sweeney 1995)

as proxies.

We document several key findings as follows. First, evidence shows that the

CSRC’s non-mandatory oral communication improves both the quantity and quality of

corporate disclosure, even when we take mandatory regulations and firm-level specific

events into account. Nevertheless, such a positive effect dampens over a quarter. To

explain this, we explore short-listed channels. One possible channel is driven by the

approval system of the Chinese financial market. In China, listed firms need to submit

4Since each word is represented by a numeric vector, we obtain words that appear in close association with the seed
word after calculating the cosine value of the two vectors.
application materials to the CSRC and wait for issuance approval when they are

financially constrained and want to finance through the public financial market via

seasoned equity offerings (SEO) or debt. Application materials and corporate operating

status are the main factors involved in financing approval decisions; however, listed

firms are still unclear about the details of the CSRC’s decision-making process. One

possible way for a firm to enhance its degree of chance to be approved for financing is

to show its obedience to the CSRC’s guidance and thus leave the CSRC with a good

impression. Therefore, firms have incentives to align themselves with the CSRC oral

communication. Consistent with our hypothesis, we find that firms with a higher

probability of being financially constrained are more likely to respond to the CSRC oral

communication. The other possible channel is that stemming from political pressure

(He and Li 2018). Since state-owned enterprises (SOEs) serve as the government’s tool

for achieving political and social objectives in addition to creating shareholder wealth,

they are more likely to follow the CSRC oral communication than are other types of

firms. We observe that the positive effect of the CSRC oral communication on the

quantity of corporate disclosure is stronger for SOEs, while the positive effect on the

quality of corporate disclosure is weaker for SOEs compared to non-SOEs.

Even with a rich set of firm-specific and macro-level controls, it is possible that

some unobservable events result in the positive impact of the CSRC oral

communication on corporate disclosure. A competing explanation is that some serious

accounting events drive the CSRC to emphasize corporate disclosure more, and firms

related to the events simultaneously improve the quantity and quality of disclosure,
leading to our results. To mitigate this concern, we consider two major accounting fraud

events that led the CSRC to more deeply emphasize corporate disclosure and

simultaneously affect the corporate disclosure behavior of firms related to the two fraud

events. After excluding observations involving these two accounting fraud events in our

sample, our results remain robust. The evidence assures us that our findings are not

driven by a specific group of firms; instead, the CSRC oral communication exerts an

impact on corporate behavior in general.

Our paper mainly contributes to two strands of the literature. First, we add to the

literature on oral communication, which has attracted public attention since the late

1990s. However, few studies have explored the impact of oral communication when

considering security regulatory commissions. The existing papers mainly focus on the

impact of the communication of central banks (e.g., Federal Open Market Commission

and European Central Bank) and the consequences of firm-level oral communication

(e.g., conference calls and management’s forward-looking statements). Studies on

central bank communication have found that the oral communication of central banks

mitigates the information asymmetry between regulators and market participants and

improves regulatory efficiency (Andersson, Dillén, and Sellin 2006; Blinder et al. 2008;

Born, Ehrmann, and Fratzscher 2014; Ehrmann and Talmi 2020; Hansen and McMahon

2016; Kohn and Sack 2011; Lunsford 2020; Reeves and Sawicki 2007; Romer and

Romer 2000; Rosa 2011; Sturm and de Haan 2011). Studies on public firm

communication have documented that oral communication from managers affects firm

profitability and stock prices (Lawrence 2013; Li 2008; Li et al. 2021; Lo, Ramos, and
Rogo 2017). The impact of central banks is mainly found at the macro level, while the

impact of managers’ oral communication is generally found at the micro level. Our

study differs from the literature in that we investigate how the macro-level oral

communication of security market regulators (e.g., the CSRC) affects micro-level firm

behavior.

Second, our study adds a new perspective to the literature on corporate disclosure.

Researchers have found that factors such as managerial characteristics, executive

compensation, institutional ownership, and director networks can affect financial

disclosure (Aboody and Kasznik 2000; Omer, Shelley, and Tice 2020). In addition,

some studies have found that mandatory regulations, such as the Sarbanes-Oxley (SOX)

Act, adoption of International Financial Reporting Standards (IFRS), and the SEC Staff

Accounting Bulletin, affect corporate disclosure (Altamuro, Beatty, and Weber 2005;

Armstrong et al. 2010; Cohen, Dey, and Lys 2008). However, there is a lack of studies

on how oral communication from stock regulatory commissions, which is non-

mandatory, affects corporate decisions. In this paper, we provide evidence of the impact

of this soft regulatory tool on corporate disclosure behavior.

The remainder of the paper is organized as follows. Section 2 constructs a measure

for the CSRC oral communication. Section 3 introduces the sample and methodology.

Section 4 presents the main analysis and findings. Section 5 discusses the possible

channels. Section 6 deals with the possible endogeneity issue, and Section 7 concludes

the paper.

2. The CSRC oral communication

2.1 Background

Due to the information asymmetry between governments and market participants,

press releases (or media releases) are one of the most effective ways for governments

to communicate their messages to others. The press conference system in China dates

back to the 1980s. Initially, only a few ministries held press conferences. Currently,

most government agencies, such as the State Council, China Banking Regulatory

Commission, Ministry of Commerce of the People’s Republic of China, and regional

governments, regularly deliver press releases and conferences. On December 30th, 2020,

Lin Xu, the Vice President of the Publicity Department of the Communist Party of

China (CPC) Central Committee, confirmed that the establishment of the CPC Central

Committee’s press release system was an important institutional arrangement and

institutional innovation for the purpose of improving the party’s governing ability5.

These phenomena signal that press release systems are already an important and

common tool for Chinese governments in delivering and circulating news.

The press release system of the CSRC was initiated in June 2013. Gang Xiao, the

then President of the CSRC, held the first press conference and expressed the CSRC's

determination to promote an open and transparent information environment 6 . Since

then, the CSRC has held a press conference every Friday afternoon. In addition to

regular press conferences, the head of the CSRC occasionally gives speeches to the

public in forums or conferences, which usually presents the CSRC’s working priorities

5 This information was sourced from Xinhua news: http://www.xinhuanet.com/politics/2020-

10/30/c_1126677111.htm.
6 This information was sourced from http://finance.people.com.cn/stock/n/2013/0401/c67815-20982304.html.
and policy interpretations.

2.2 Measure of the CSRC oral communication

To measure the CSRC’s oral emphasis on corporate disclosure, we first apply

word2vec (Mikolov et al. 2013) to the transcripts of its press conferences and official

speeches, converting all words into high-dimensional vectors by learning the semantic

relations between them. As each unique word in our texts is represented by a vector, we

compute the cosine similarity of vectors and then obtain a set of words closest to the

seed word “disclosure” for our dictionary. Based on the words in the disclosure

dictionary, we measure the CSRC’s oral emphasis on financial disclosure., the details

of which are described below.

2.2.1 Data, preprocessing and parsing, and learning phrases

Our dataset includes the transcripts of 275 press conferences and 237 official

speeches from January 2014 to December 2019. We segment the documents into words

using Jieba 7 and replace named entities, such as persons, locations, times, and

company names, with predefined tags. With the development of the financial market,

some specific financial compound words, such as Alipay (支付宝), profitability (盈利

能力), Shanghai-Shenzhen stock market (沪深股市), and National Equities Exchange

and Quotations (新三板), appear in our transcripts. We treat them as single words and

add them to the Jieba dictionary. After preprocessing our transcripts of the CSRC’s

press conferences and official speeches, we obtain a corpus that included all unique

words from the transcripts.

2.2.2 Constructing of a disclosure dictionary by applying the word2vec method

7 Jieba is an open-source Python Chinese word segmentation module, available at https://github.com/fxsjy/jieba.

 We apply the word2vec model, which learns the meaning of a word (phrase) based

on its context, to create a dictionary starting with the seed word “disclosure”. In essence,

word2vec learns the meaning of a specific word via a two-layer neural network that

reads the textual documents and thereby learns to predict all neighboring words. The

parameters in the neural network are randomly initialized. As learning progresses, the

parameters in the neural network are adjusted via backpropagation (i.e., a standard

training algorithm for neural networks), and the network continuously improves its

ability to predict any word’s neighboring words. These parameters become an effective

vector representation of the word when learning is completed after a number of

iterations with the documents. The vector captures the properties of the original co-

occurrence relationship between the word and its neighbors. Moreover, Levy and

Goldberg (2014) show that the vectorization achieved by the word2vec method is

similar to that of a singular value decomposition (i.e., a dimension-reducing technique)

of the neighboring word count matrix.

We can use two approaches to train the word2vec model—continuous bag of words

(CBOW) and skip-gram. The CBOW method predicts the central word when

neighboring words are given, while the skip-gram model predicts neighboring words

when the central word is given. The skip-gram model is computationally slower than

the CBOW model but captures infrequent words better (Google 2013). Since the oral

communication transcripts involve many topics and include many infrequent words, we

use the skip-gram model to train the word2vec model. The dimension of word vectors
is set to 3008, and two words are defined as neighbors if they are no farther than five

words apart in a sentence. We improve learning efficiency using negative sampling9.

After training, the model converts each of the 14,464 words10 in the corpus to a 300-

dimensional vector that represents that word’s meaning.

We treat the word “disclosure” as the seed word and develop an expanded, context-

specific dictionary to measure the degree to which the CSRC emphasizes disclosure.

Let the vector representations for the seed word “disclosure” be 𝑉 {𝑑𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒} =

[𝑥1 , 𝑥 2 , … , 𝑥 300 ]. Since the other unique words in our corpus are also represented by

300-dimensional vectors, we compute the cosine similarity of each vector representing

the word in our corpus and 𝑉 {𝑑𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒} . We select the top 500 words11 that are similar

to the seed word “disclosure” (the highest cosine similarity) to comprise the dictionary.

Table 1 Panel A lists the thirty most representative words in the disclosure dictionary

ordered by their descending similarity with the seed word “disclosure”, which shows

that the closest word to the seed word “disclosure” is symmetric, and the cosine

similarity score is greater than 0.55. The words that follow are finance, corporate

finance, and authenticity, which all have intuitively close semantic relations with the

seed word disclosure. As the measure of the CSRC’s oral emphasis on disclosure is

constructed based on the appearance frequency of the disclosure dictionary words, we

8 Pennington et al. (2014) found that word vectors with greater than 300 dimensions offer little improvement for
solving word analogy problems.
9 The model randomly generates focal-word-neighboring word pairs that are not observed in the corpus as negative

samples and then learns to discriminate between negative samples and focal-word-neighboring-word pairs that are
actually in the corpus.
10 We ignore words that appear fewer than five times in the corpus.
11 Following Li et al. (2020), we select the top 500 closest words in the “disclosure dictionary”. As a robustness

check, we expand the disclosure dictionary to include the top 1,000 closest words. Our main findings hold,
suggesting that our results are robust to the number of dictionary words.
put more weight on frequently occurring words. Table 1 Panel B lists the thirty most

frequently occurring words in the dictionary for the seed word “disclosure”, with the

frequency being the term frequency inverse document frequency (tf.idf) weighted word

count. Panel B shows that information in the disclosure dictionary is the most frequently

occurring word, followed by firm, launch, and insider.

To check the validity of our methodology, we rank transcripts based on the

appearance frequency of words belonging to the disclosure dictionary and check

whether the topics of the top ranked transcripts concern corporate disclosure. One top

ranked transcript was of a speech given by President of the CSRC Gang Xiao at a

conference held on January 6th, 2014.12 The thirty most representative words in the

disclosure dictionary and the seed word “disclosure” appear 20 times in the speech. A

partial script of his speech is as follows: “It is necessary to 1) comprehensively evaluate

and improve the information disclosure standards for securities issuance, company

operations, mergers and acquisitions (M&A) and various corporate products; 2) enact

and implement voluntary and concise information disclosure rules; and 3) improve the

quality of information disclosure and refine disclosure and commitment

responsibilities.” The topic of this speech is on protecting retail investors’ rights, with

an emphasis on improving the information disclosure environment, which is closely

related to corporate disclosure. This example and other top ranked scripts confirm that

our established disclosure dictionary captures the CSRC’s emphasis on disclosure.

2.2.3 Scoring the CSRC’s oral emphasis on disclosure

12 This information is sourced from

http://www.csrc.gov.cn/pub/newsite/zjhxwfb/xwdd/201401/t20140106_240966.html.
 After generating the disclosure dictionary with 500 words, we measure the degree

of the CSRC’s emphasis on disclosure in a given quarter. We use the weighted count of

the number of words in the dictionary associated with the seed word “disclosure”

divided by the total number of words in the document, where the weight is tf.idf, as

advocated by Loughran and McDonald (2011). Such a weighting scheme assigns lower

weights to terms that appear more frequently across documents. As a result, such words

have a smaller influence on the degree to which the CSRC emphasizes financial

disclosure than do those that underwent equal-term frequency weighting.

We define the degree of the CSRC’s emphasis on information disclosure through

oral communication as Oral. We combine the press conference and official speech

transcripts in each quarter and treat the combined transcripts as documents. For each

document, we use the weighted count of the number of words in the disclosure

dictionary divided by the total number of words in the document. Therefore, the

quarterly measure, 𝑂𝑟𝑎𝑙𝑡 , is defined as follows:

𝑁
∑𝑖∈𝑑𝑖𝑐𝑡𝑖𝑜𝑛𝑎𝑟𝑦 𝐶𝑜𝑢𝑛𝑡𝑖𝑡 𝑙𝑜𝑔( )
𝑑𝑓
𝑂𝑟𝑎𝑙𝑡 = (1)
𝑤𝑜𝑟𝑑𝑁𝑢𝑚𝑡

where 𝐶𝑜𝑢𝑛𝑡𝑖𝑡 is the frequency of the occurrence of disclosure dictionary word 𝑖 in

the document of quarter t, 𝑁 is the total number of documents, 𝑑𝑓 is the number of

documents containing the word 𝑖, and 𝑤𝑜𝑟𝑑𝑁𝑢𝑚𝑡 is the total number of words in the

document of quarter t.

3. Sample and methodology

3.1 Sample

The CSRC has two oral communication channels. The first includes press
conferences, which have been held on every Friday afternoon since June 2013. The

other channel includes the head or leaders of the CSRC occasionally delivering

speeches to the public. We obtain the transcripts of both press conferences and official

speeches from the CSRC’s official website. Our dataset includes the transcripts of 275

press conferences13 and 237 official speeches from January 2014 to December 201914.

Then, we obtain firm characteristics, financial announcements, and corporate

financing data from China Stock Market Accounting Research (CSMAR). After

merging all datasets, we have 3,939 unique firms and 77,742 firm-quarter observations.

3.2 Variable definitions

We measure corporate disclosure from two dimensions: disclosure quantity and

disclosure quality. For disclosure quantity, we use the firm-level number of total

announcements and the number of abnormal announcements (excluding regular reports)

in each quarter as proxies. For disclosure quality, we apply earnings management

measures based on the Jones model (Jones 1991) and the modified Jones model

(Dechow, Sloan, and Sweeney 1995).

A firm’s earnings management level is measured by discretionary accruals, which

are defined as the difference between its total accruals and the fitted normal accruals

derived from the Jones model (Jones 1991), and is specified as follows:
𝑇𝐴𝑖,𝑡 1 ∆𝑅𝑒𝑣𝑖,𝑡 𝑃𝑃𝐸
= 𝛽0 + 𝛽1 𝐴𝑠𝑠𝑒𝑡 + 𝛽2 𝐴𝑠𝑠𝑒𝑡 + 𝛽3 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡 + 𝜎𝑖,𝑡 (2)
𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1 𝑖,𝑡−1 𝑖,𝑡−1 𝑖,𝑡−1

13 If a press conference mentions “please refer to the news release”, then we also include the corresponding content
in the news release with our press conference transcripts.
14 Press conferences were initiated in June 2013, but since they were a newly developed policy tool, it took time for

listed firms to react. Therefore, we leave half a year for firms to adapt their beliefs, and thus, our dataset starts in
January 2014. Since, in 2020, regular press conferences were suspended due to COVID-19, our dataset ends in
December 2019.
Total accruals TAi,t are defined as earnings minus operating cash flows, ASSETi,t-1 is

defined as total assets at the beginning of year t, ΔREVi,t is defined as the change in

sales revenue from the preceding year, and PPEi,t is defined as gross property, plant,

and equipment. The fitted normal accruals are computed as follows:

1 ∆𝑅𝑒𝑣𝑖,𝑡 𝑃𝑃𝐸
̂0 + 𝛽
𝑁𝐴1𝑖,𝑡 = 𝛽 ̂1 ̂2
+𝛽 ̂3
+𝛽 𝑖,𝑡
(3)
𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1

Firm-year-specific discretionary accruals are calculated as 𝐷𝐴1𝑖,𝑡 =

𝑇𝐴
(𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡 ) − 𝑁𝐴1𝑖,𝑡 . Since both positive and negative discretionary accruals are
𝑖,𝑡−1

earnings manipulations, we take the absolute value of DA1 (absDA1) as the proxy for

earnings management.

The modified Jones model considers accounts receivable (AR) when calculating

normal accruals:
1 ∆𝑅𝑒𝑣𝑖,𝑡 −∆𝐴𝑅𝑖,𝑡 𝑃𝑃𝐸𝑖,𝑡
̂0 + 𝛽
𝑁𝐴2𝑖,𝑡 = 𝛽 ̂1 ̂2
+𝛽 ̂3
+𝛽 (4)
𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1

with the change in AR subtracted from the change in sales revenue. Firm-year-specific
𝑇𝐴
discretionary accruals are calculated as 𝐷𝐴2𝑖,𝑡 = (𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡 ) − 𝑁𝐴2𝑖,𝑡 . Then, the
𝑖,𝑡−1

absolute value of DA2 (absDA2) is used as another proxy for earnings management.

3.3 Methodology

To explore the impact of the CSRC oral communication on corporate disclosure,

we apply the following specification:

𝐷𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒𝑖,𝑡+1 = 𝛼 + 𝛾1 𝑂𝑟𝑎𝑙𝑡 + 𝛾2 𝑋𝑖,𝑡 + 𝛾3 𝐼𝑛𝑑 ∗ 𝑌𝑒𝑎𝑟 + 𝜀𝑖,𝑡+1 (5)

where 𝐷𝑖𝑠𝑐𝑙𝑜𝑠𝑢𝑟𝑒𝑖,𝑡+1 indicates the disclosure quantity and disclosure quality for

firm i in quarter t+1. 𝑂𝑟𝑎𝑙𝑡 is the CSRC oral communication on disclosure in quarter

t. X is firm characteristics, including the book-to-market ratio (BM), return on assets

(ROA), leverage, and LnSize. Leverage is the liability divided by total assets, and

LnSize is the natural logarithm of total assets. Since the number of announcements in

the previous period may affect that in the current period, we include a lag term for the

number of announcements when exploring their effect on disclosure quantity. As

different industries may react to the CSRC oral communication differently, we add

industry-year fixed effects to control for this factor. We also control for firm fixed

effects to consider intrinsic time-invariant factors.

3.4 Summary statistics

Table 2 shows the summary statistics. We study the impact of the CSRC oral

communication on firms’ disclosure behavior from two aspects: disclosure quantity and

disclosure quality. For corporate disclosure quantity, the average number of

announcements for each firm in each quarter is approximately 31.629, and the average

number of abnormal announcements (excluding regular reports) is approximately

29.859. For financial disclosure quality, the means of the Jones and modified Jones

model measures are both approximately 0.038. The CSRC oral communication on

disclosure is approximately 0.022, which indicates that on average, the proportion of

the weighted count of “disclosure dictionary” words in quarterly documents based on

the tf.idf weighting method is 2.2%. To better interpret the magnitude of the CSRC oral

communication impact, we apply the standardized oral communication measure in the

following parts.

DSEO is the indicator of whether a firm has issued seasoned equity offerings, and

DMA is the indicator of whether a firm has experienced M&As. Reg CSRC is the
number of regulations related to corporate disclosure issued by the CSRC. We find that

on average, 1.106 disclosure-related regulations are issued per quarter. Firm

characteristics are consistent with those in the prior literature.

4. Empirical results

4.1 Baseline results

In this section, we explore whether and how CSRC oral communication affects

corporate disclosure behavior.

Table 3 shows the baseline results. The dependent variables are the quantity and

quality of corporate disclosure: the dependent variables in the first two columns are the

natural logarithm of the number of announcements and the natural logarithm of the

number of abnormal announcements (excluding period reports), and those in the last

two columns are the earnings management measures based on the Jones and modified

Jones models, respectively. All dependent variables are moved forward one quarter to

mitigate endogeneity concerns. The independent variable Oral measures the degree of

the CSRC’s oral emphasis on information disclosure in press conferences and officers’

speeches. We also control for quarterly firm characteristics, industry-year, and firm

fixed effects in the regression. The results show that both the quantity and quality of

corporate disclosure are improved when the CSRC places more emphasis on corporate

disclosure. For a one-standard-deviation change in the CSRC oral communication, the

total number of announcements increases by 13.8%, the number of abnormal

announcements increases by 14.7%, and the earnings manipulation decreases by 0.3%.

This result indicates that although the CSRC oral communication is non-mandatory,
public firms react to it by improving both the quantity and quality of corporate

disclosure.

Since corporate disclosure can also be affected by firm events and the mandatory

regulations of the CSRC, in the next step, we control for firm special events and

disclosure-related regulations to check whether the impact still remains. We add

whether the firm issues seasoned equity offerings (DSEO) or experiences M&As (DMA)

to the baseline regression. We also control the number of disclosure-related regulations

issued by the CSRC (Reg CSRC) to consider the impact of mandatory requirements.

Table 4 shows that after adding those additional control variables, the impact of the

CSRC oral communication still exists: both the quantity and quality of corporate

disclosure are improved significantly when the CSRC places a greater emphasis on

disclosure. To further understand the specific change in different types of

announcements, Appendix C separates corporate announcements based on their types

and shows how different types of announcements react to the CSRC oral

communication. In addition, we have tried to construct the CSRC’s oral measures based

on different weighting methods, including tf, tf.idf (log), and tf.idf with similarity

weights (Li et al. 2021), and our findings still hold. These evidence shows that the

impact of the CSRC oral communication on corporate disclosure is robust.

4.2 Long-term effects of the CSRC oral communication

Since oral communication is non-mandatory, to what extent and how long the effect

of the CSRC oral communication lasts are unclear. In this section, we explore whether

the impact of the CSRC oral communication is temporary or can last for a long period
of time. Therefore, we check the impact of the CSRC oral communication on corporate

disclosure in the disclosure measures in the forward two quarters and in the forward

three quarters. Table 5 shows the results. Panels A and B present the results on

disclosure quantity and quality, respectively. In Panel A, the dependent variables in the

first three columns are the total number of announcements in the forward one quarter,

two and three quarters. Moreover, the dependent variables in the last three columns are

the number of abnormal announcements in the following one, two, and three quarters.

We find that the CSRC’s oral impact on corporate disclosure quantity exists only for

one quarter: for the forward two and three quarters, the effect changes to negative or

nonsignificant. Panel B shows the results on disclosure quality. The dependent variables

for the first three columns are earnings management measures based on the Jones model

in the forward one, two, and three quarters, and that for the last three columns are

earnings management measures based on the modified Jones model in the forward one,

two, and three quarters. We find that for the forward two and three quarters, the

coefficient of oral communication becomes positive, which is opposite of the forward

one-quarter results. The evidence confirms that the effect of the CSRC oral

communication on corporate disclosure lasts for one quarter.

The results on both disclosure quantity and disclosure quality indicate that the

impact of oral communication is temporary: unlike mandatory regulations, the CSRC

oral communication is non-mandatory, which means that there is no binding force for

listed firms to follow up. Therefore, managers do not have incentives to consistently

respond to the CSRC oral communication for a long period of time. In the next part, we
will explore the possible reasons for this short-term reaction.

5. Mechanisms of the effect

Unlike mandatory regulations on corporate financial disclosure, the CSRC oral

communication is only an appeal and does not require firms to respond. However, based

on the current evidence, we find that corporations voluntarily react to the CSRC oral

communication. In this part, we try to determine the motivations for public firms to

respond.

5.1 Financing needs

Different from the registration process in the US financial market, the Chinese

security market adopts the application and approval system. In China, when listed firms

are financially constrained and would like to finance through the public financial

market, they need to submit the application materials to the CSRC and wait for issuance

approval. Application materials and corporate operating status should be the main

factors involved in financing approval decisions; however, listed firms are still unclear

about the details of the CSRC decision-making process. One possible way that they can

smoothen the approval process is by making a good impression with the CSRC.

Therefore, listed have incentives to follow the CSRC’s guidance when they plan to

finance.

Based on this hypothesis, if a firm is financially constrained and seeks financing

approval from the CSRC, then it would be more likely to respond to the CSRC oral

communication, which may help it make a good impression with the CSRC and shorten

the waiting period. In contrast, if a firm just raises funds by issuing securities, then it
would be less likely to have financing needs in the near future. Therefore, there is less

incentive for such a firm to react to the CSRC oral communication.

Listed firms usually have two financing channels: issuing SEOs and issuing debts.

In the following sections, we explore the effect of these two channels.

5.1.1 SEO issuance

To identify whether a firm is in preparation process for security issuance and has

an incentive to cater to the CSRC, we first investigate the SEO timeline, as shown in

Figure 1.

Figure 1 Timeline of SEO issuance

In China, there are three main steps through which a public firm can successfully

issue SEOs: 1) in the preparation stage, the firm drafts a preliminary issuance plan and

obtains approval during shareholder meetings, which takes approximately six months15;

2) the public firm submits application materials to the CSRC, which then makes

decisions over three months; and 3) the public firm obtains approval from the CSRC

and issues the SEO within six months16.

Since SEO issuance documents uncover only the SEO issuance date, we cannot

determine the exact date on which a firm starts to plan for SEO issuance and has the

incentive to cater to the CSRC. Therefore, instead, we try to identify a firm that is not

financially constrained and does not have the incentive to cater to the CSRC. As Figure

15 We thank Feng Gao from Guangfa Securities for helpful timeline information.
16 This information is sourced from https://www.wstimes.cn/article/24340.htm.
1 shows, the average SEO issuance cycle is approximately 3 years, the preparation

process is approximately 6 months, the CSRC screening process last up to 3 months,

and the listed company issues SEOs within 6 months starting from the approval date. If

a firm just issued an SEO in the previous year, then the earliest time that it starts

planning for the next SEO issuance is approximately one year later, which means that

it is less likely to have an incentive to cater to the CSRC in the following quarter.

Therefore, we define a firm as not having financing needs if it just issued an SEO in the

preceding year (DSEOl). For firms that just issued SEOs in the preceding year, the

amount of issuance also affects the fund constraint status of a firm: for firms that just

issued a larger amount of funds over their total assets, they should be less likely to apply

for SEOs in the near future. Therefore, we scale the amount of SEO issuance by total

assets to capture the eagerness of financing needs (QSEOl). We expect firms with more

funds raised to be less likely to respond. Then, we add DSEOl and QSEOl into the

baseline regression and interact them with the CSRC oral communication to check

whether financing needs are one of the motivations for firms to respond to the CSRC

oral communication.

The first four columns in Table 6 show the results of whether a firm experiences

financing needs, and the last four columns show to what extent a firm needs the funding.

The dependent variable for columns 1 and 5 is the natural logarithm of the number of

announcements in the forward one quarter, that for columns 2 and 6 is the natural

logarithm of the number of abnormal announcements in the forward one quarter, that

for columns 3 and 7 is the earnings management measure in the forward one quarter
based on the Jones model, and that for columns 4 and 8 is the earnings management

measure in the forward one quarter based on the modified Jones model. From the

interaction term of the first four columns, we find that firms with a lower probability of

having financing needs are less likely to respond to the CSRC oral communication.

When a firm issues an SEO only in the preceding year, the positive impacts of the CSRC

oral communication on the disclosure quantity (although not significant) and quality

becomes weaker. Moreover, from the last four columns, we find that the positive

impacts of the CSRC oral communication on the quantity and quality of corporate

disclosure become less effective for firms issuing a larger amount of SEOs.

5.1.2 Debt issuance

In addition to equity issuance, debt issuance is another important way for firms to

raise funds. We expect that firms that have just issued debt (i.e., with a lower probability

of being short on funds) are less likely to respond to the CSRC oral communication.

Since the average debt issuance cycle is 142 days, which is equal to approximately three

quarters, we define a firm as not being short on funds if it has issued debt in the previous

quarter (Ddebtl). As the degree of funding constraints is also related to the amount of

debt issued, we take the amount of debt issued scaled by total assets into account

(Qdebtl) as an additional measure to proxy for the urgency of financing needs. Table 7

shows the results. The first four columns denote whether a firm is in need of financing,

and the last four columns denote the degree of funding constraints for a firm from a

debt issuance perspective. The dependent variable for columns 1 and 5 is the natural

logarithm of the number of announcements in the forward one quarter, that for columns
2 and 6 is the natural logarithm of the number of abnormal announcements in the

forward one quarter, that for columns 3 and 7 is the earnings management measure in

the forward one quarter based on the Jones model, and that for columns 4 and 8 is the

earnings management measure in the forward one quarter based on the modified Jones

model. We find that firms that have issued debt in the previous quarter, which indicates

that they are less likely to be short on funds, are less sensitive to the CSRC oral

communication: the positive impacts of the CSRC oral communication on disclosure

quantity and quality become weaker. By applying the amount of debt issued as the

proxy for the degree of financing needs, we obtain similar results: a larger amount of

funds mitigates the impact of the CSRC oral communication on disclosure quantity and

quality.

The evidence for financing needs shows that when firms are short on funds and

seek approval from the CSRC in the near future, they respond more actively to the

CSRC oral communication. Smoothening the approval process is one of the reasons to

appeal to non-mandatory oral communication.

5.2 Political pressure

A key feature of the Chinese economy is its high proportion of state-owned

enterprises (SOEs). Different from non-SOEs, SOEs serve as the government’s tool in

achieving political and social objectives in addition to creating shareholder wealth.

Since SOEs are controlled by the Chinese government, when non-mandatory

regulations are issued, these firms are more likely to comply to demonstrate political

correctness (He and Li 2018). In this sense, we try to explore whether SOEs respond to
the CSRC oral communication differently than non-SOEs. We define a firm as an SOE

if the government owns more than 50% of the total shares outstanding and interact the

SOE indicator with oral communication to explore this impact. Table 8 shows the

results. The dependent variables for the first two columns are the natural logarithm of

the forward-one-quarter number of announcements and the natural logarithm of the

forward-one-quarter number of abnormal announcements. The dependent variables for

the last two columns are proxies for earnings management based on the Jones and

modified Jones models. We find that when the CSRC emphasizes financial disclosure

more, SOEs are more likely to report more announcements; however, at the same time,

they are more likely to manipulate earnings. The evidence indicates that SOEs’

responses to the CSRC remain tokenistic, as they improve only their disclosure quantity

but not their disclosure quality.

6. Further evidence to mitigate endogeneity concerns

The possible endogenous issue mainly arises from two aspects: 1) there may be

omitted variables that are related to both corporate disclosure and the CSRC oral

communication, leading to plausible significant results, and 2) there may exist

simultaneous causality, which means that corporate disclosure affects the CSRC oral

communication, but not vice versa.

In terms of the omitted variable issue, although we have controlled for firm specific

events, such as SEOs and M&As, as well as time-invariant firm characteristics, it is

possible that other events affect both corporate disclosure and the CSRC’s oral

emphasis on disclosure. For example, an alternative explanation for our results is that
some serious events lead the CSRC to emphasize corporate disclosure more, and the

firms related to these events improve both disclosure quantity and disclosure quality,

leading to our results.

To mitigate omitted variable concerns, on the one hand, in addition to firm-specific

events, we have added various macro condition factors such as GDP and CPI into our

analysis. As a result, our findings still hold. On the other hand, we have determined two

severe accounting fraud events: the accounting fraud of Jiangsu Kangde Xin Composite

Material Co. (referred to as Kangdexin hereafter) and Kangmei Pharmaceutical Co.

(referred to as Kangmei hereafter), which caused the CSRC to emphasize corporate

disclosure more and may have affected the disclosure behavior of a specific group of

firms.

In 2019, the shareholder tunneling of Kangdexin17 and fabricated sales scandal of

Kangmei18 astonished the Chinese capital market and brought attention to the role of

accounting firms in verifying corporate financial statements. Then, in turn, the firms

that hired the same accounting agencies as Kangdexin and Kangmei were paid close

attention to by both the CSRC and other market participants. As a result, it is possible

that these two serious accounting fraud events reminded the CSRC to emphasize

corporate disclosure more, and thus, firms hiring the same accounting agencies as those

hired by Kangdexin and Kangmei were more likely to subsequently respond, leading to

the positive relation between the CSRC oral communication and corporate disclosure,

17 This information is sourced from https://www.reuters.com/article/us-china-deposit-kangdexin-

idUSKCN1SF05K.
18 This information is sourced from https://www.straitstimes.com/business/companies-markets/chinese-firm-

overstates-cash-by-6b-using-false-documents.
as described above. To mitigate this concern, we exclude firms that have hired the same

accounting agencies as those hired by Kangmei or Kangdexin in our sample and check

whether our findings still hold. As Table 9 shows, after excluding firms related to the

two abovementioned accounting fraud events, which mitigates the concern that a

specific group of firms is causing the positive relation, we find that our results still hold:

the CSRC oral communication increases the number of announcements and improves

the quality of earnings statements. Therefore, our findings are not driven by specific

events.

In terms of the causality issue, the concern is that corporate disclosure may increase

the CSRC oral communication on disclosure, but not vice versa. To mitigate this

concern, on the one hand, we apply forward-period corporate disclosure as the

dependent variable. On the other hand, we attempt a reverse regression to see whether

earnings report quantity (quality) can affect the CSRC oral communication. In our

untabulated results, we find the opposite relation: more announcements (higher

earnings management) lead to less (more) CSRC emphasis on corporate disclosure,

which means that worse corporate disclosure leads to more oral emphasis on corporate

disclosure by the CSRC. This evidence shows that more (higher-quality) corporate

disclosure leads to less oral communication on disclosure by the CSRC, and with the

existence of this negative relation, we still find that public firms react to the CSRC oral

communication positively. Therefore, the significance and magnitude of the impact of

the CSRC oral communication on corporate disclosure is stronger if corporate

disclosure behaviors’ impact on the CSRC’s communication is ruled out.

7. Conclusion

Oral communication has become a common regulatory tool for governments.

However, few studies have empirically addressed the impact of security regulatory

commissions’ oral communication on corporate decisions. This paper measures the oral

emphasis of the CSRC on financial disclosure using the word2vec model and explores

its impact on corporate disclosure behaviors.

Several findings emerge from our analysis. First, we find that the CSRC oral

communication can improve both the quantity and quality of corporate disclosure.

Second, the empirical results show that the impact is temporary and lasts for only one

quarter. Third, the marginal effect of the CSRC’s oral emphasis on disclosure depends

on whether the firm is financially constrained. Finally, SOEs respond to the CSRC oral

communication differently than do non-SOEs.

Our study can provide directions for further exploration in several ways. On the

one hand, the constructed measure can cultivate future studies on the CSRC oral

communication from other perspectives, such as the risk-taking behavior and

consistency of the CSRC’s press conferences and speeches. On the other hand, the

developed approach can be applied to the oral communication of other regulatory

departments, such as the State Council Information Office and Ministry of Foreign

Affairs. By further exploring the role of government oral communication, both

regulators and market participants can have a better understanding of this newly

developed policy tool and adjust their behavior accordingly.

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Appendix A Variable definition
Financial disclosure
Num The number of announcements released by a firm in a given
quarter.
Numabn The number of announcements, excluding regular reports,
released by a firm in a given quarter.
LnNum Natural logarithm of one plus Num.
LnNumabn Natural logarithm of one plus Numabn.
absDA1 A firm’s discretionary accruals are defined as the difference
between its total accruals and the fitted normal accruals derived
from the Jones model (Jones 1991), which are specified as
𝑇𝐴𝑖,𝑡 1 ∆𝑅𝑒𝑣𝑖,𝑡 𝑃𝑃𝐸
= 𝛽0 + 𝛽1 𝐴𝑠𝑠𝑒𝑡 + 𝛽2 𝐴𝑠𝑠𝑒𝑡 + 𝛽3 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡 + 𝜎𝑖,𝑡 .
𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1 𝑖,𝑡−1 𝑖,𝑡−1 𝑖,𝑡−1

Total accruals TAi,t are defined as earnings minus operating cash

flows, ASSETi,t-1 is defined as total assets at the beginning of
year t, ΔREVi,t is defined as the change in sales revenue from
over the preceding year, and PPEi,t is gross property, plant, and
equipment. The fitted normal accruals are computed as
1 ∆𝑅𝑒𝑣𝑖,𝑡 𝑃𝑃𝐸
̂0 + 𝛽
𝑁𝐴1𝑖,𝑡 = 𝛽 ̂1 ̂2
+𝛽 ̂3
+𝛽 𝑖,𝑡
. Firm-
𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1

year-specific discretionary accruals are calculated as 𝐷𝐴1𝑖,𝑡 =

𝑇𝐴𝑖,𝑡
( ) − 𝑁𝐴1𝑖,𝑡 . Then, the absolute value of DA1
𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡−1

(absDA1) is the proxy for earnings management.

absDA2 The modified Jones model follows Dechow, Sloan, and Sweeney
𝑇𝐴𝑖,𝑡 1
(1995) and is specified as = 𝛽0 + 𝛽1 𝐴𝑠𝑠𝑒𝑡 +
𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1 𝑖,𝑡−1

∆𝑅𝑒𝑣𝑖,𝑡 𝑃𝑃𝐸
𝛽2 𝐴𝑠𝑠𝑒𝑡 + 𝛽3 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡 + 𝜎𝑖,𝑡 . Total accruals TAi,t are defined
𝑖,𝑡−1 𝑖,𝑡−1

as earnings minus operating cash flows, ASSETi,t-1 is defined as

total assets at the beginning of year t, ΔREVi,t is defined as the
change in sales revenue over the preceding year, and PPEi,t is
gross property, plant, and equipment. The fitted normal accruals
1 ∆𝑅𝑒𝑣𝑖,𝑡 −∆𝐴𝑅𝑖,𝑡
̂0 + 𝛽
are computed as 𝑁𝐴2𝑖,𝑡 = 𝛽 ̂1 ̂2
+𝛽 +
𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1 𝐴𝑠𝑠𝑒𝑡𝑖,𝑡−1

̂3 𝑃𝑃𝐸𝑖,𝑡 , with the change in accounts receivable (AR)

𝛽 𝐴𝑠𝑠𝑒𝑡 𝑖,𝑡−1

subtracted from the change in sales revenue. Firm-year-specific

𝑇𝐴
discretionary accruals are calculated as 𝐷𝐴2𝑖,𝑡 = (𝐴𝑠𝑠𝑒𝑡𝑠𝑖,𝑡 )−
𝑖,𝑡−1

𝑁𝐴2𝑖,𝑡 . Then, the absolute value of DA2 (absDA2) is the proxy

for earnings management.
CSRC communication and regulation
Oral The weighted frequency count of words in the disclosure
dictionary in the CSRC oral communication transcripts
(including those of both press conferences and official speeches).
Reg CSRC The number of disclosure-related regulations issued by the
CSRC in a given quarter.
Firm characteristics
BM Book-to-market ratio in a given quarter, calculated as the book
value of equity scaled by the market value of equity.
ROA ROA in a given quarter, calculated as net income scaled by total
assets.
Lev Leverage in a given quarter, calculated as total liabilities scaled
by total assets.
LnSize Natural logarithm of total assets.
DSEO A dummy variable indicating whether there is an SEO for a firm
in a given quarter.
DMA A dummy variable indicating whether there is an M&A event for
a firm in a given quarter.
Mechanism interpretation
DSEOl A dummy variable indicating whether the firms issued an SEO in
the preceding year.
QSEOl The amount of the SEO issued in the preceding year divided by
total assets.
DNdebtl A dummy variable indicating whether the firm issued debt in the
preceding quarter.
Qdebtl The amount of debt issued in the preceding quarter divided by
total assets.
SOE A dummy variable indicating whether the firm is an SOE.
Appendix B word2vec: skip-gram model

The skip-gram word2vec model is a two-layer neural network that predicts

neighboring words given a central word. Specifically, given a corpus with M words in
sequence 𝑤1 , 𝑤2 , 𝑤3 , … 𝑤𝑀 , the skip-gram model maximizes the average log
probability:
1
∑𝑀 𝑀
𝑖=1 ∑−𝑐≤𝑗≤𝑐,𝑗≠0 log 𝑝(𝑤𝑖+𝑗 |𝑤𝑖 ),
𝑀

where c is the size of the context window (5 words in our case). The conditional
probability p(𝑤𝑖+𝑗 |𝑤𝑖 ) denotes the probability that a neighboring word, 𝑤𝑖+𝑗 , occurs
when the central word is 𝑤𝑖 . The conditional probability p(𝑤𝑖+𝑗 |𝑤𝑖 ) in the skip-gram

model is defined as follows:

′ 𝑇
exp(𝑣𝑤𝑖+𝑗 𝑣𝑤𝑖 )
p(𝑤𝑖+𝑗 |𝑤𝑖 ) =
′ 𝑇
∑𝑊
𝑤=1 exp(𝑣𝑤 𝑣𝑤𝑖 )

where W denotes the total number of unique words, and 𝑣𝑤 and 𝑣𝑤′ are two vector
representations of a word 𝑤. The word2vec model is a two-layer neural network, where
′
each word 𝑤 is represented by an input vector 𝑣𝑤 and an output vector 𝑣𝑤 .
Appendix C The impact of CSRC oral communication on different types of corporate announcements

This table presents the impact of the CSRC oral communication on different types of corporate announcements. All dependent variables are moved
forward one quarter. We find that both the number of regular and that of irregular reports increase. The increase in regular reports and required
documents, such as those related to initial public offerings (IPO) and seasoned equity offerings (SEO) are caused by the increase in supplemental
materials. Most of the impact comes from other financing, shareholder meetings, and boards of directors and supervisors. The underlying reason
is that these reports are more flexible for a firm to release, so it is easier for it to respond by filing those types of files. There is a decrease in the
violation and litigation reports since as the CSRC now emphasizes financial disclosure more, and thus, firms are supposed to behave in a manner
that is more consistent with regulatory requirements.

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Ownership
Regular Rights Convertible Other change and Operating
Missing IPO reports SEO issue bonds financing M&A activity
Oral 0.134*** 0.000 0.027*** 0.012*** 0.001** 0.003*** 0.175*** 0.011*** 0.048***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
BM -0.481*** -0.003** -0.208*** -0.174*** -0.005* -0.069*** -0.181*** -0.190*** -0.099***
(0.03) (0.00) (0.02) (0.02) (0.00) (0.01) (0.02) (0.02) (0.02)
ROA -1.953*** 0.005 -1.505*** 0.639*** 0.023** -0.059** -1.474*** -0.213*** -0.209***
(0.09) (0.00) (0.06) (0.05) (0.01) (0.03) (0.05) (0.06) (0.08)
Lev -0.282*** 0.002 -0.326*** 0.511*** 0.025*** 0.055*** -0.407*** -0.010 -0.234***
(0.04) (0.00) (0.02) (0.02) (0.00) (0.01) (0.02) (0.02) (0.03)
LnSize 0.087*** -0.001*** -0.049*** -0.131*** -0.001 0.044*** 0.107*** 0.080*** 0.076***
(0.01) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.01) (0.01)
LnNum -0.029*** -0.000 -0.284*** 0.260*** 0.212*** 0.289*** -0.105*** 0.168*** 0.065***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
f.DSEO 0.487*** 0.008*** 0.005 0.709*** -0.003* -0.012*** -0.078*** 0.248*** 0.229***
 (0.02) (0.00) (0.01) (0.01) (0.00) (0.00) (0.01) (0.01) (0.01)
f.DMA 0.253*** 0.000 0.115*** 0.025*** -0.001 0.006*** 0.022*** 0.464*** 0.285***
(0.01) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.01)
Reg CSRC 0.015*** 0.000 -0.014*** 0.002 0.000** 0.002*** -0.005*** 0.013*** 0.003**
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Observations 71942 71942 71942 71942 71942 71942 71942 71942 71942
R-squared 0.103 0.010 0.130 0.260 0.055 0.129 0.176 0.245 0.090
Firm FE Yes Yes Yes Yes Yes Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes Yes Yes Yes Yes Yes

(1) (2) (3) (4) (5) (6) (7) (8) (9)

Change of
Board of executive,
directors directors,
Shareholder Share- and and
meeting pledging Litigation supervisors Emergency Violation supervisors Donation Others
Oral 0.212*** 0.012*** -0.004*** 0.103*** -0.000 -0.003*** 0.038*** -0.000 0.022***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
BM -0.393*** -0.184*** 0.077*** -0.301*** 0.001 0.002 0.015 -0.004* -0.104***
(0.03) (0.02) (0.01) (0.02) (0.00) (0.01) (0.03) (0.00) (0.02)
ROA -2.005*** -0.058 -0.240*** -0.980*** -0.020*** -0.066*** -0.632*** 0.008 -0.428***
(0.09) (0.05) (0.02) (0.08) (0.01) (0.02) (0.08) (0.01) (0.07)
Lev -0.168*** -0.138*** 0.159*** -0.250*** 0.002 0.051*** -0.082*** -0.010*** 0.043
 (0.03) (0.02) (0.01) (0.03) (0.00) (0.01) (0.03) (0.00) (0.03)
LnSize 0.098*** 0.113*** -0.044*** 0.067*** 0.000 -0.003 0.026*** 0.002*** -0.016**
(0.01) (0.01) (0.00) (0.01) (0.00) (0.00) (0.01) (0.00) (0.01)
l.LnNum -0.089*** 0.110*** 0.310*** -0.167*** 0.025*** -0.004 -0.042*** -0.051*** 0.071***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
f.DSEO 0.070*** 0.094*** -0.017*** 0.097*** -0.002 -0.024*** 0.150*** -0.001 0.032***
(0.02) (0.01) (0.00) (0.01) (0.00) (0.00) (0.01) (0.00) (0.01)
f.DMA 0.148*** 0.056*** 0.008*** 0.174*** -0.001 0.004*** 0.075*** 0.001** 0.090***
(0.01) (0.00) (0.00) (0.01) (0.00) (0.00) (0.01) (0.00) (0.00)
Reg CSRC -0.011*** 0.004*** 0.000 0.014*** 0.001*** -0.000 -0.004** 0.000 -0.000
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Observations 71942 71942 71942 71942 71942 71942 71942 71942 71942
R-squared 0.092 0.053 0.137 0.074 0.012 0.014 0.023 0.010 0.048
Firm FE Yes Yes Yes Yes Yes Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes Yes Yes Yes Yes Yes
Table 1 Thirty most representative and most frequently occurring words in the
disclosure dictionary

This table shows the words in the disclosure dictionary. Panel A lists the thirty most
representative words in the disclosure dictionary ordered by their descending similarity
with the seed word “disclosure”. Panel B lists the thirty most frequently occurring
words in the dictionary for the seed word “disclosure”, with the frequency being the
tf.idf weighted word count.
Panel A: Thirty most similar words with the seed word disclosure
Words (Chinese) Words (English) Similarity
对称 symmetry 0.553
财务 finance 0.523
公司财务 corporate finance 0.520
真实性 authenticity 0.498
核心内容 core content 0.493
编报 report 0.479
简明 concise 0.474
语言 language 0.460
客观性 objectivity 0.440
正文 main text 0.438
冗余 redundancy 0.438
准则 rule 0.437
可比性 comparability 0.437
保存 save 0.434
发行人 issuer 0.431
有用 usefulness 0.431
自愿性 voluntary 0.424
报告书 report statement 0.422
季度 quarter 0.418
义务人 obligor 0.416
财务会计 financial accounting 0.409
格式 format 0.409
半年报 semi-annual report 0.406
财务报告 financial report 0.403
摘要 abstract 0.401
完整 integrity 0.399
报送 submission 0.393
义务 duty 0.393
充分性 sufficiency 0.389
解释性 explanatory 0.388
Panel B: Thirty most frequently occurring words for the seed word disclosure
Words (Chinese) Words (English) % Cum. %
信息 information 8.23% 8.23%
公司 firm 7.04% 15.27%
发行 launch 6.84% 22.11%
内幕 insider 6.34% 28.45%
退市 delisting 4.52% 32.98%
减持 stock reduction 3.24% 36.21%
相关 correlation 2.96% 39.17%
要求 require 2.23% 41.40%
行为 behavior 2.02% 43.43%
控制 control 1.44% 44.86%
发行人 issuer 1.41% 46.27%
内容 content 1.32% 47.60%
规范 standard 1.17% 48.77%
发布 issue 1.17% 49.94%
违规 illegal 1.09% 51.03%
修订 amendment 1.09% 52.12%
存在 exist 1.09% 53.21%
失信 trust-breaking 1.06% 54.27%
作出 make 1.04% 55.31%
上述 above-mentioned 1.04% 56.35%
重大 significant 1.03% 57.38%
规则 rule 0.97% 58.36%
公司债券 corporate bonds 0.95% 59.30%
承诺 commitment 0.91% 60.21%
年报 annual report 0.90% 61.11%
适当 proper 0.81% 61.92%
涉嫌 suspected 0.81% 62.73%
公众 the public 0.77% 63.50%
保本 break-even 0.74% 64.24%
虚假 false 0.71% 64.94%
Table 2 Summary statistics

This table reports the descriptive statistics for firms listed on the Shanghai and
Shenzhen Stock Exchanges from 2014 to 2019. Num is the number of announcements
in a given quarter, and Numabn is the number of abnormal announcements in a given
quarter. absDA1 and absDA2 are proxies for earnings management. Oral is the CSRC’s
oral emphasis on corporate disclosure. DSEO and DMA are dummies for seasoned
equity offerings and M&As. Reg CSRC is the disclosure-related regulation issued by
the CSRC. BM is the book-to-market ratio. ROA is return on assets, and Lev is the
liabilities scaled by total assets. LnSize is the natural logarithm of total assets. Variable
definitions are detailed described in the Appendix.
N Mean Std.Dev P25 P50 P75
Num 77742 31.629 21.239 16.000 28.000 43.000
Numabn 77742 29.859 20.791 14.000 26.000 41.000
absDA1 74856 0.038 0.041 0.011 0.025 0.050
absDA2 73986 0.038 0.041 0.011 0.026 0.050
Oral 77742 0.022 0.004 0.019 0.021 0.024
DSEO 77742 0.035 0.183 0.000 0.000 0.000
DMA 77742 0.403 0.491 0.000 0.000 1.000
Reg CSRC 77742 1.106 1.535 0.000 1.000 2.000
BM 72125 0.596 0.251 0.404 0.584 0.784
ROA 75713 0.023 0.044 0.005 0.018 0.040
Lev 75713 0.430 0.220 0.251 0.413 0.586
LnSize 77696 22.247 1.470 21.243 22.043 22.999
Table 3 CSRC oral communication and corporate disclosure

The table presents the impact of the CSRC’s oral communication on corporate
disclosure. The dependent variable for the first column is the natural logarithm of the
forward-one-quarter number of announcements, and that for the second column is the
natural logarithm of the forward-one-quarter number of abnormal announcements. The
dependent variables for the last two columns are proxies for earnings management
based on the Jones and modified Jones models. All independent variables are measures
at time t. The sample consists of all publicly traded firms on the Shanghai and Shenzhen
Stock Exchanges from 2014 to 2019. Detailed variable definitions are in the Appendix.
***, ** and* indicate significance at the 1%, 5%, and 10% levels using the two-tailed
test. Standard errors are reported in parentheses.
(1) (2) (3) (4)
f.LnNum f.LnNumabn f.absDA1 f.absDA2
Oral 0.138*** 0.147*** -0.003*** -0.003***
(0.00) (0.00) (0.00) (0.00)
BM -0.524*** -0.534*** 0.005*** 0.004***
(0.03) (0.03) (0.00) (0.00)
ROA -1.996*** -1.862*** 0.008* 0.001
(0.09) (0.09) (0.00) (0.00)
Lev -0.164*** -0.134*** 0.007*** 0.007***
(0.03) (0.03) (0.00) (0.00)
LnSize 0.099*** 0.110*** -0.008*** -0.008***
(0.01) (0.01) (0.00) (0.00)
LnNum -0.019***
(0.00)
LnNumabn -0.008*
(0.00)
Observations 71942 71942 70386 69556
R-squared 0.082 0.081 0.027 0.028
Firm FE Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes
Table 4 Robustness check: CSRC regulation and firm event

The table presents the impact of the CSRC’s oral communication on corporate
disclosure by including the CSRC’s disclosure-related regulations and firm-specific
events. The dependent variable for the first column is the natural logarithm of the
forward-one-quarter number of announcements, and that for the second column is the
natural logarithm of the forward-one-quarter number of abnormal announcements. The
dependent variables for the last two columns are proxies for earnings management
based on the Jones and modified Jones models. DSEO and DMA are dummy variables
indicating whether there is an SEO or M&A for the firm. Reg CSRC is the number of
disclosure-related regulations issued by the CSRC in quarter t. The sample consists of
all publicly traded firms on the Shanghai and Shenzhen Stock Exchanges from 2014 to
2019. Detailed variable definitions are in the Appendix. ***, ** and* indicate
significance at the 1%, 5%, and 10% levels using the two-tailed test. Standard errors
are reported in parentheses.
(1) (2) (3) (4)
f.LnNum f.LnNumabn f.absDA1 f.absDA2
Oral 0.144*** 0.153*** -0.003*** -0.002***
(0.00) (0.00) (0.00) (0.00)
BM -0.421*** -0.430*** 0.007*** 0.007***
(0.03) (0.03) (0.00) (0.00)
ROA -2.020*** -1.892*** 0.010** 0.003
(0.09) (0.09) (0.00) (0.00)
Lev -0.225*** -0.199*** 0.007*** 0.007***
(0.03) (0.03) (0.00) (0.00)
LnSize 0.089*** 0.100*** -0.008*** -0.008***
(0.01) (0.01) (0.00) (0.00)
LnNum -0.024***
(0.00)
LnNumabn -0.012***
(0.00)
f.DSEO 0.386*** 0.406*** 0.003*** 0.003***
(0.01) (0.02) (0.00) (0.00)
f.DMA 0.325*** 0.331*** 0.003*** 0.003***
(0.01) (0.01) (0.00) (0.00)
Reg CSRC 0.009*** 0.011*** -0.001*** -0.001***
(0.00) (0.00) (0.00) (0.00)
Observations 71942 71942 70386 69556
R-squared 0.130 0.129 0.031 0.032
Firm FE Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes
Table 5 The long-term effect of CSRC oral communication

The table shows the long-term impact of the CSRC oral communication on corporate disclosure. Panel A shows the impact on disclosure quantity,
and Panel B shows the impact on disclosure quality. In Panel A, the dependent variables for the first three columns are the natural logarithm of the
number of announcements in the forward-one-quarter, forward-two-quarters, and forward-three-quarters. The dependent variables of the last three
columns are the natural logarithm of the total number of abnormal announcements in the forward-one-quarter, forward-two-quarters, and forward-
three-quarters. In Panel B, the dependent variables for the first three columns are the earnings management measure based on the Jones model in
the forward-one-quarter, forward-two-quarters, and forward-three-quarters. The dependent variables of the last three columns are the earnings
management measure based on the modified Jones model in the forward-one-quarter, forward-two-quarters, and forward-three-quarters. Variable
definitions are detailed described in the Appendix. ***, ** and* indicate significance at the 1%, 5%, and 10% levels using the two-tailed test.
Standard errors are reported in parentheses.

(1) (2) (3) (4) (5) (6)

LnNum LnNumabn
f.LnNum f2.LnNum f3.LnNum f.LnNumabn f2.LnNumabn f3.LnNumabn
Oral 0.144*** 0.004 -0.144*** 0.153*** -0.014*** -0.153***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
BM -0.421*** -0.385*** -0.223*** -0.430*** -0.357*** -0.212***
(0.03) (0.03) (0.03) (0.03) (0.03) (0.03)
ROA -2.020*** -0.708*** 0.468*** -1.892*** -0.498*** 0.552***
(0.09) (0.10) (0.10) (0.09) (0.10) (0.10)
Lev -0.225*** 0.229*** 0.271*** -0.199*** 0.258*** 0.291***
(0.03) (0.03) (0.03) (0.03) (0.04) (0.04)
LnSize 0.089*** 0.057*** 0.012 0.100*** 0.053*** 0.008
(0.01) (0.01) (0.01) (0.01) (0.01) (0.01)
f.DSEO 0.386*** 0.002 -0.017 0.406*** 0.003 -0.019
(0.01) (0.01) (0.01) (0.02) (0.02) (0.02)
f.DMA 0.325*** 0.015** 0.041*** 0.331*** 0.020*** 0.045***
(0.01) (0.01) (0.01) (0.01) (0.01) (0.01)
Reg CSRC 0.009*** -0.022*** 0.015*** 0.011*** -0.027*** 0.025***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
f.Oral 0.189*** 0.056*** 0.203*** 0.030***
(0.00) (0.00) (0.00) (0.00)
f2.Oral 0.069*** 0.085***
(0.00) (0.00)
LnNum -0.024***
(0.00)
f.LnNum 0.021***
(0.00)
f2.LnNum -0.035***
(0.00)
LnNumabn -0.012***
(0.00)
f.LnNumabn 0.033***
(0.00)
f2.LnNumabn -0.018***
(0.00)
Observations 71942 68159 64451 71942 68159 64451
R-squared 0.130 0.134 0.211 0.129 0.129 0.199
Firm FE Yes Yes Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes Yes Yes
Panel B CSRC oral communication’s long-term impact on disclosure quality
(1) (2) (3) (4) (5) (6)
absDA1 absDA2
f.absDA1 f2.absDA1 f3.absDA1 f.absDA2 f2.absDA2 f3.absDA2
Oral -0.003*** 0.003*** 0.006*** -0.002*** 0.003*** 0.005***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
BM 0.007*** -0.009*** -0.012*** 0.007*** -0.009*** -0.012***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
ROA 0.010** -0.021*** 0.001 0.003 -0.026*** -0.002
(0.00) (0.00) (0.00) (0.00) (0.00) (0.01)
Lev 0.007*** 0.009*** 0.010*** 0.007*** 0.008*** 0.009***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
LnSize -0.008*** -0.004*** -0.001* -0.008*** -0.004*** -0.001*
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
f.DSEO 0.003*** -0.005*** -0.004*** 0.003*** -0.006*** -0.004***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
f.DMA 0.003*** -0.000 -0.000 0.003*** -0.001* -0.000
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Reg CSRC -0.001*** 0.002*** -0.002*** -0.001*** 0.002*** -0.002***
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
f.Oral -0.004*** 0.005*** -0.004*** 0.005***
(0.00) (0.00) (0.00) (0.00)
f2.Oral -0.003*** -0.003***
(0.00) (0.00)
Observations 70386 66690 63068 69556 65868 62259
R-squared 0.031 0.034 0.048 0.032 0.036 0.048
Firm FE Yes Yes Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes Yes Yes
Table 6 Corporate response to CSRC oral communication and seasoned equity offering (SEO)

This tables show the impact of the CSRC oral communication on financial disclosure based on corporate issuance on equity in the preceding year.
DSEOl is a dummy variable that indicates whether the firm issued an SEO in the preceding year. QSEOl is the amount of equity issuance in the
preceding year scaled by total assets. The dependent variable for columns 1 and 5 is the natural logarithm of the number of announcements in the
forward-one-quarter, that for columns 2 and 6 is the natural logarithm of the number of abnormal announcements in the forward-one-quarter, that
for columns 3 and 7 is the earnings management measure in the forward-one-quarter based on the Jones model, and that for columns 4 and 8 is the
earnings management measure in the forward-one-quarter based on the modified Jones model. Variable definitions are detailed described in the
Appendix. ***, ** and* indicate significance at the 1%, 5%, and 10% levels using the two-tailed test. Standard errors are reported in parentheses.
(1) (2) (3) (4) (5) (6) (7) (8)
f.LnNum f.LnNumabn f.absDA1 f.absDA2 f.LnNum f.LnNumabn f.absDA1 f.absDA2
Oral 0.144*** 0.154*** -0.003*** -0.002*** 0.145*** 0.154*** -0.003*** -0.002***
(0.004) (0.004) (0.000) (0.000) (0.004) (0.004) (0.000) (0.000)
Oral*DSEOl -0.017 -0.026 0.003*** 0.003***
(0.016) (0.017) (0.001) (0.001)
DSEOl 0.047*** 0.049*** -0.003*** -0.003***
(0.018) (0.018) (0.001) (0.001)
Oral*QSEOl -0.120** -0.143** 0.008*** 0.008***
(0.055) (0.057) (0.003) (0.003)
QSEOl 0.126** 0.129** -0.004 -0.004
(0.060) (0.062) (0.003) (0.003)
BM -0.420*** -0.429*** 0.007*** 0.007*** -0.421*** -0.430*** 0.007*** 0.007***
(0.027) (0.028) (0.001) (0.001) (0.027) (0.028) (0.001) (0.001)
ROA -2.021*** -1.893*** 0.010** 0.003 -2.023*** -1.895*** 0.010** 0.003
(0.086) (0.088) (0.004) (0.004) (0.086) (0.088) (0.004) (0.004)
Lev -0.223*** -0.197*** 0.007*** 0.007*** -0.222*** -0.196*** 0.007*** 0.007***
(0.033) (0.034) (0.002) (0.002) (0.033) (0.034) (0.002) (0.002)
LnSize 0.087*** 0.099*** -0.008*** -0.008*** 0.088*** 0.099*** -0.008*** -0.008***
(0.010) (0.010) (0.000) (0.001) (0.010) (0.010) (0.000) (0.001)
LnNum -0.024*** -0.024***
(0.004) (0.004)
LnNumabn -0.012*** -0.012***
(0.004) (0.004)
f.DSEO 0.386*** 0.406*** 0.003*** 0.003*** 0.386*** 0.406*** 0.003*** 0.003***
(0.015) (0.015) (0.001) (0.001) (0.015) (0.015) (0.001) (0.001)
f.DMA 0.324*** 0.331*** 0.003*** 0.003*** 0.324*** 0.331*** 0.003*** 0.003***
(0.006) (0.006) (0.000) (0.000) (0.006) (0.006) (0.000) (0.000)
Reg CSRC 0.009*** 0.011*** -0.001*** -0.001*** 0.010*** 0.011*** -0.001*** -0.001***
(0.002) (0.002) (0.000) (0.000) (0.002) (0.002) (0.000) (0.000)
Observations 71942 71942 70386 69556 71942 71942 70386 69556
R-squared 0.131 0.129 0.031 0.032 0.131 0.129 0.031 0.032
Firm FE Yes Yes Yes Yes Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes Yes Yes Yes Yes
Table 7 Corporate response to CSRC oral communication and debt issuance

This table shows the impact of the CSRC’s oral communication on financial disclosure based on corporate debt issuance in the preceding quarter.
Ddebtl is a dummy variable that indicates whether the firm issued debt in the preceding quarter. Qdebtl is the amount of debt issuance in the
preceding quarter scaled by total assets. The dependent variable for columns 1 and 5 is the natural logarithm of the number of announcements in
the forward-one-quarter, that for columns 2 and 6 is the natural logarithm of the number of abnormal announcements in the forward-one-quarter,
that for columns 3 and 7 is the earnings management measure in the forward-one-quarter based on the Jones model, and that for columns 4 and 8
is the earnings management measure in the forward-one-quarter based on the modified Jones model. Detailed variable definitions are in the
Appendix. ***, ** and* indicate significance at the 1%, 5%, and 10% levels using the two-tailed test. Standard errors are reported in parentheses.
(1) (2) (3) (4) (5) (6) (7) (8)
f.LnNum f.LnNumabn f.absDA1 f.absDA2 f.LnNum f.LnNumabn f.absDA1 f.absDA2
Oral 0.143*** 0.153*** -0.003*** -0.002*** 0.143*** 0.153*** -0.003*** -0.002***
(0.004) (0.004) (0.000) (0.000) (0.004) (0.004) (0.000) (0.000)
Oral*Ddebtl 0.015 0.013 0.002*** 0.002***
(0.014) (0.015) (0.001) (0.001)
Ddebtl 0.016 0.022 -0.000 -0.000
(0.016) (0.017) (0.001) (0.001)
Oral*Qdebtl 0.186 0.126 0.052*** 0.053***
(0.260) (0.268) (0.014) (0.014)
Qdebtl -0.069 0.003 0.003 0.004
(0.277) (0.285) (0.015) (0.015)
BM -0.421*** -0.430*** 0.007*** 0.007*** -0.421*** -0.430*** 0.007*** 0.007***
(0.027) (0.028) (0.001) (0.001) (0.027) (0.028) (0.001) (0.001)
ROA -2.021*** -1.893*** 0.010** 0.003 -2.020*** -1.892*** 0.010** 0.003
(0.086) (0.088) (0.004) (0.004) (0.086) (0.088) (0.004) (0.004)
Lev -0.226*** -0.200*** 0.007*** 0.007*** -0.225*** -0.199*** 0.007*** 0.007***
(0.033) (0.034) (0.002) (0.002) (0.033) (0.034) (0.002) (0.002)
LnSize 0.088*** 0.100*** -0.008*** -0.008*** 0.089*** 0.100*** -0.008*** -0.008***
(0.010) (0.010) (0.000) (0.001) (0.010) (0.010) (0.000) (0.001)
LnNum -0.024*** -0.024***
(0.004) (0.004)
LnNumabn -0.012*** -0.012***
(0.004) (0.004)
f.DSEO 0.386*** 0.406*** 0.003*** 0.003*** 0.386*** 0.406*** 0.003*** 0.003***
(0.015) (0.015) (0.001) (0.001) (0.015) (0.015) (0.001) (0.001)
f.DMA 0.325*** 0.331*** 0.003*** 0.003*** 0.325*** 0.331*** 0.003*** 0.003***
(0.006) (0.006) (0.000) (0.000) (0.006) (0.006) (0.000) (0.000)
Reg CSRC 0.009*** 0.011*** -0.001*** -0.001*** 0.009*** 0.011*** -0.001*** -0.001***
(0.002) (0.002) (0.000) (0.000) (0.002) (0.002) (0.000) (0.000)
Observations 71942 71942 70386 69556 71942 71942 70386 69556
R-squared 0.130 0.129 0.031 0.032 0.130 0.129 0.031 0.032
Firm FE Yes Yes Yes Yes Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes Yes Yes Yes Yes
Table 8 Corporate response to CSRC oral communication and state-owned
enterprise (SOE)

This table reports the impact of the CSRC oral communication on financial disclosure
based on corporate ownership property, that is, whether a firm is an SOE. SOE is a
dummy that indicates whether the firm is an SOE. The dependent variables for the first
two columns are the natural logarithm of the forward-one-quarter number of
announcements and the natural logarithm of the forward-one-quarter number of
abnormal announcements. The dependent variables for the last two columns are proxies
for earnings management based on the Jones and modified Jones models. The sample
consists of all publicly traded firms on the Shanghai and Shenzhen Stock Exchanges
from 2014 to 2019. Detailed variable definitions can be found in the Appendix. ***, **
and* indicate significance at the 1%, 5%, and 10% levels using the two-tailed test.
Standard errors are reported in parentheses.
(1) (2) (3) (4)
f.LnNum f.LnNumabn f.absDA1 f.absDA2
Oral 0.138*** 0.148*** -0.003*** -0.003***
(0.00) (0.00) (0.00) (0.00)
SOE*Oral 0.016*** 0.016** 0.001*** 0.001***
(0.01) (0.01) (0.00) (0.00)
SOE -0.041 -0.053* 0.000 -0.000
(0.03) (0.03) (0.00) (0.00)
BM -0.421*** -0.431*** 0.007*** 0.007***
(0.03) (0.03) (0.00) (0.00)
ROA -2.026*** -1.898*** 0.009** 0.003
(0.09) (0.09) (0.00) (0.00)
Lev -0.227*** -0.201*** 0.007*** 0.007***
(0.03) (0.03) (0.00) (0.00)
LnSize 0.088*** 0.099*** -0.008*** -0.008***
(0.01) (0.01) (0.00) (0.00)
LnNum -0.025***
(0.00)
LnNumabn -0.013***
(0.00)
f.DSEO 0.386*** 0.406*** 0.003*** 0.003***
(0.01) (0.02) (0.00) (0.00)
f.DMA 0.325*** 0.331*** 0.003*** 0.003***
(0.01) (0.01) (0.00) (0.00)
Reg CSRC 0.009*** 0.011*** -0.001*** -0.001***
(0.00) (0.00) (0.00) (0.00)
Observations 71942 71942 70386 69556
R-squared 0.131 0.129 0.031 0.032
Firm FE Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes
Table 9 Corporate response to CSRC oral communication and accounting fraud
The table presents the impact of the CSRC’s oral communication on corporate
disclosure by excluding firms related to the two serious accounting fraud events. The
dependent variable for the first column is the natural logarithm of the forward-one-
quarter number of announcements, and that for the second column is the natural
logarithm of the forward-one-quarter number of abnormal announcements. The
dependent variables for the last two columns are proxies for earnings management
based on the Jones and modified Jones models. DSEO and DMA are dummy variables
indicating whether there are SEOs or M&As for the firm in the given quarter. Reg
CSRC is the number of disclosure-related regulations issued by the CSRC in quarter t.
The sample consists of all publicly traded firms on the Shanghai and Shenzhen Stock
Exchanges from 2014 to 2019. Detailed variable definitions are in the Appendix. ***,
** and* indicate significance at the 1%, 5%, and 10% levels using the two-tailed test.
Standard errors are reported in parentheses.

(1) (2) (3) (4)

f.LnNum f.LnNumabn f.absDA1 f.absDA2
Oral 0.143*** 0.153*** -0.003*** -0.003***
(0.00) (0.00) (0.00) (0.00)
BM -0.422*** -0.432*** 0.009*** 0.009***
(0.03) (0.03) (0.00) (0.00)
ROA -2.172*** -2.038*** 0.007 -0.001
(0.10) (0.10) (0.00) (0.00)
Lev -0.253*** -0.225*** 0.006*** 0.006***
(0.04) (0.04) (0.00) (0.00)
LnSize 0.098*** 0.109*** -0.008*** -0.008***
(0.01) (0.01) (0.00) (0.00)
LnNum -0.018***
(0.00)
LnNumabn -0.006
(0.00)
f.DSEO 0.389*** 0.409*** 0.003*** 0.003***
(0.02) (0.02) (0.00) (0.00)
f.DMA 0.329*** 0.335*** 0.003*** 0.003***
(0.01) (0.01) (0.00) (0.00)
Reg CSRC 0.010*** 0.011*** -0.001*** -0.001***
(0.00) (0.00) (0.00) (0.00)
Observations 58741 58741 57275 56572
R-squared 0.134 0.132 0.031 0.032
Firm FE Yes Yes Yes Yes
Year*Ind Yes Yes Yes Yes