One of the most important functions of the capital market is to
allocate financial resources efficiently. To achieve this function,
the information efficiency of the capital market is paramount.
Beyer et al. (2010) suggest that investors demand financial
statement information for two reasons. First, financial statement
information helps investors predict the future prospect of firms
and value securities before they commit their capital. Second,
once the capital is committed, financial statement information
assists investors to monitor firms. Beyer et al. (2010) go on to
suggest that three important components of the corporate
information environment cater for investors’ financial information
demands. These are voluntary disclosure attributed to firms’
financial reporting incentives, mandatory disclosure influenced by
intervention through standards and regulations, and analyst
research as financial information intermediation. In the case of
China, the findings confirm that intervention through changes in