Non-financial information farsightedness and capital market information efficiency

Non-financial information disclosed by firms is an important channel for investors and analysts to understand the operating conditions of firms and a major source of information other than financial data. This study examines the impact of disclosure of forward-looking non-financial information content by listed companies on the information efficiency of the capital market. Using data from A-share listed companies in China's Shanghai and Shenzhen markets from 2007 to 2022, it is found that forward-looking non-financial information content has a positive impact on improving capital market information efficiency, while analysts' attention plays a moderating role. The mechanism study finds that non-financial information disclosure with forward-looking content affects the accuracy of analysts' earnings forecasts, the type of audit opinion, and the degree of financialisation of firms, which in turn have different impacts on the information efficiency of the capital market. The heterogeneity test finds that disclosure of non-financial information with forward-looking content will more significantly improve the information efficiency of the capital market if the listed company receives a high level of media attention, as well as listed companies with higher quality of internal control. This study explores the forward-looking characteristics of non-financial information in depth, enriches the study of information efficiency in the capital market, and provides theoretical suggestions for the content and direction of corporate non-financial information disclosure.

Chuan Zhang, Yueyun Wang