Economic policy uncertainty, investor sentiment, and voluntary disclosure on internet platform

ABSTRACT

Based on the quarterly data of listed companies on the ‘hudongyi’ Internet platform of the Shenzhen Stock Exchange from 2011 to 2018, this study uses the economic policy uncertainty (EPU) index to explore the impact of EPU on voluntary disclosure. We find that EPU is positively correlated with the timeliness and sufficiency of voluntary disclosure. Moreover, investor sentiment plays a mediation role between economic policy uncertainty and voluntary disclosure. Furthermore, for state-owned, high bankruptcy risk, and low growth firms, the positive effect of EPU on the timeliness and sufficiency of voluntary disclosure becomes larger.

KEYWORDS:

• Economic Policy Uncertainty
• voluntary Disclosure
• investor Sentiment
• internet Platform

Acknowledgments

We would like to thank Editage (www.editage.cn) for English language editing.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. This is only a partial list.

2. The South China Morning Post (SCMP) is the first (founded in 1903) and largest Hong Kong English-language newspaper published by the SCMP Group. Its contents cover news regarding Hong Kong, Mainland China, and Asia.

3. Meanwhile, this study also considers controlling for the time (quarter) effect. However, serious multicollinearity appears after the quarter dummy variable is added because of the macroeconomic data of this study, which seasonally adjusted for percentage change in the gross domestic product (GDPCHG), has the same value in each quarter. Adding GDPCHG to the regression is equivalent to controlling for the quarter effect. Therefore, the quarter effect of this study is controlled.

4. Within a mediation model, a suppression effect would be present when the direct and mediated effects of an independent variable on a dependent variable have opposite signs. Such models are known as inconsistent mediation models, as contrasted with consistent mediation models in which the direct and mediated effects have the same sign (Mackinnon, Krull, and Lockwood 2000). In Table 2, the signs of the indirect effect (or mediation effect,${\beta }_1\times {\delta }_2$) and the direct effect (${\delta }_1$) are opposite, which means SENT has a suppression effect. The suppression effect is a generalized mediation effect. The effect of the independent variable lnEPU on the dependent variable (lnDelay and RA) would become greater, after controlling the influence of SENT.