Abstract
The Board Secretary is a unique position under China's corporate governance system. Its concept originates from the Western "Company Secretary." Initially established around 1993 to facilitate mainland companies' overseas listings and financing, the role was legally established by the Company Law of the People's Republic of China in 2005. This law first recognized the establishment and duties of the Board Secretary: "A listed company shall have a Board Secretary responsible for preparing shareholders' and board meetings, keeping documents, managing shareholder information, handling information disclosure, and other matters." It also specified that the Board Secretary is a senior executive of the enterprise, with their responsibilities, qualifications, and appointment procedures enjoying the same legal rights and constraints as other senior executives. From a legal perspective, the primary duties of the Board Secretary involve managing company documents and information disclosure. However, despite legal recognition, the Board Secretary's executive status is often not acknowledged by internal company personnel, leading to a mismatch. To address this "mismatch between authority and responsibility," the practice of concurrent positions for Board Secretaries has become an effective solution.On the other hand, on-site research by analysts is an important scenario for the Board Secretary to convey information to analysts. Domestic and international surveys show that on-site research can effectively help analysts obtain company information, enhance their judgment, and improve the quality of their research reports. The Shenzhen Stock Exchange encourages companies listed on the main board or the SME board to establish a detailed record-keeping system for information disclosure, documenting activities such as research, communication, and interviews with specific parties. This information is compiled into an "Investor Relations Activity Record Form" and disclosed promptly. Since 2009, almost all companies listed on the Shenzhen Stock Exchange have publicly disclosed their on-site research and investor relations activities. Although regulatory authorities strictly prohibit selective disclosure of significant unpublished information to analysts or certain investors, on-site research remains a crucial information-gathering activity. Unlike collecting and processing secondary materials like documents and online data, on-site research involves directly observing the actual operations of the listed company, allowing analysts to judge the company's real operating conditions and verify the accuracy and credibility of the publicly disclosed information. Additionally, during on-site research, analysts have direct dialogues with senior management (e.g., the Board Secretary). While these interactions may not involve significant unpublished information, they can further elaborate on already disclosed information and provide detailed answers to analysts' questions. These interactions affect the information analysts acquire and integrate into their "soft information," updating their understanding of the company and helping them make forward-looking judgments about the company's current situation and future prospects.
Based on the dual background of the continuous improvement of the concurrent Board Secretary system and the increasing practice of analysts' on-site research, this study focuses on whether the concurrent Board Secretary can utilize the on-site research scenario to perform its information transmission function and the differential effects of different concurrent positions of the Board Secretary. To test these issues, this paper examines the impact of different concurrent positions of the Board Secretary on analysts' forecasts based on a sample of non-bank listed companies on the Shenzhen Stock Exchange from 2012 to 2020. The study finds that: (1) For companies with Board Secretaries concurrently serving as directors, the accuracy of analysts' forecasts improves less before and after on-site research, and their forecast optimism increases more. This indicates that analysts obtain more optimistic information after researching companies with Board Secretaries serving as directors, conveying more optimistic information about the company's future development. (2) For companies with Board Secretaries concurrently serving as executives, the accuracy of analysts' forecasts significantly improves before and after on-site research, and their forecast optimism increases less. This indicates that analysts gain a deeper and more accurate understanding of the company's current production and operation information after researching companies with Board Secretaries serving as executives, conveying more accurate information about the company's current operational status. (3) The optimistic information transmission effect of concurrent director Board Secretaries is more significant in samples with poor information environments, high company uncertainty, severe agency problems, and strong analyst relationships. (4) The accurate information transmission effect of concurrent executive Board Secretaries is more significant in samples with poor information environments, high company uncertainty, weak agency problems, and strong analyst relationships.
This paper's academic contributions are threefold. First, it supplements the literature on the economic consequences of concurrent Board Secretary roles, which has previously overlooked their direct impact on information transmission and forecast results in the capital market. By examining different concurrent positions, this study explores how various concurrent Board Secretary roles influence analysts' forecast behavior in the context of on-site research. Second, it adds to the research on information sources during analysts' on-site research. Existing literature mainly focuses on the determinants and economic consequences of on-site research, while the information acquisition process remains a "black box." This paper clarifies the role of the Board Secretary as an information source during on-site research and its impact on analysts' forecast behavior. Third, it enriches the literature on factors influencing analysts' forecasts by illustrating how senior management characteristics affect analysts' forecasts, thereby connecting and detailing the processes of corporate information transmission and analysts' information acquisition.
The practical significance of this paper lies in three aspects. First, it provides data support for listed companies' investor relations management and information disclosure mechanism design, helping policymakers implement capital market reforms, promote effective information transmission, boost market confidence, and improve market efficiency. Second, it offers data support and practical insights for analysts' on-site research decisions and information acquisition, aiding analysts in making more effective research decisions and identifying information sources during on-site research. Third, it helps listed companies understand the roles and positions of Board Secretaries, improving corporate governance and establishing smoother communication channels between companies and investors. This study examines the different effects of concurrent positions, helping companies make decisions that benefit information transmission and investor relations management, thereby enhancing corporate governance and gaining capital market trust.
| Date of Award | 2 Sept 2024 |
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| Original language | Chinese (Traditional) |
| Awarding Institution |
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| Supervisor | Jianqiao HONG (External Supervisor) & Xiangang XIN (Supervisor) |