Block ownership and information disclosure in privatized firms-Evidence of Web disclosure from China

This paper examines whether the different types of block shareholdings will have a different impact on the extent of Web voluntary disclosure during the differential privatization stages. Prior literature suggests that block ownership may have a substitutive or complementary monitoring effect on corporate disclosure. However, for economies transferring from state endowment to being privately held such as China, the inconsistent roles of state, legal persons and private blockholders with tradable shares have caused concerns in terms of their influence on a company’s voluntary disclosure. Our results show that state and private blockholders with tradable shares have diverse Web reporting policies during the differential privatization stage. The state and legal person shares are less likely to engage in Internet voluntary disclosure and private blockholders appear inattentive to Web disclosure too in highly privatized firms. The findings indicate the possibility of information asymmetry in highly privatized firms, namely that a reporting choice may exist due to the blockholder’s intention rather than public’s interests. The results suggest that reinforcement of the institutional environment and continuous scrutiny of a firm’s reporting practices should be emphasized during privatization.