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Journal of Management and Business Research, 2014
31（ 2 ）：135-155
DOI： 10.6504/JOM.2014.31.02.03 |
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| The Association between Banking Relationship and Information Disclosure Policy of Firms |
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| Both the correspondence relationship with banks and information disclosure policy for firms can reduce information asymmetry and costs of capital. This paper attempts to understand the attitude firms have for these two policies. This paper presents two contending hypotheses: substitutive disclosure hypothesis and complementary disclosure hypothesis. The former considers a negative relationship between lending relationship and information disclosure level; the latter proposes a positive relationship. The sample is the stock-listing and OTC firms from 2005 to 2010. The finding is that the disclosure policy of firms is consistent with the substitutive disclosure hypothesis, indicating that when firms have close banking lending relationships, to reduce disclosure costs, a passive disclosure policy is considered because of banks' signaling effects and not worrying about future financing. However, this phenomenon also reveals that firms possibly have up-limit level of disclosures and thus information transparency does not rise further. The substitutive disclosure result is more significant for firms under family control or with a larger deviation between voting and cash flow rights that likely face more serious agency problems. Considering voluntary disclosure, the effect of global financial crisis of 2008, and other multiple robustness checks, the conclusion is unchanged. |
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| Information Disclosure, Banking Lending Relationship, Substitutive Disclosure Hypothesis, Complementary Disclosure Hypothesis |
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