Could regulatory information disclosure impact the behaviour of corporate over-financialization? : evidence from Chinese comment letters

Taking Chinese A-share listed firms from 2014 to 2018 as our samples, this paper investigates the impact of regulatory information disclosure on corporate over-financialisation behaviour from comment letters. The empirical results show that financialisation-related comment letters can effectively reduce the behaviour of corporate over-financialisation, and this positive governance effect is more pronounced in companies with strong market arbitrage motivation. Further tests show that the more intensity of the financialisation-related comment letters, the higher the governance effect of comment letters on over-financialisation. Specifically, the governance effect of inquiries mechanism is more significant when the financialisation-related comment letters have the questions of "over-financialisation'. From the specific influence mechanism, the governance effect of financialisation-related comment letters is achieved by potential violation cost and the pressure of market attention. Finally, the governance effect of financialisation-related comment letters on over-financialisation can spill over to non-comment-letter-receivers in the same industry or in the same corporation groups.