Accounting Information: Mandatory? Voluntarily?

From the "knot" in the ancient times to the "real-time report" in the Internet era, from the modern "four column list" to the "double entry bookkeeping" that has been used so far, accounting is produced and developed on the basis of the needs of economic management activities. Financial reports, as the terminal products of accounting information system, will inevitably develop and change along with the development of the economy.

From the perspective of regulation, the contents of financial report can be divided into mandatory disclosure and voluntary disclosure.

Mandatory disclosure is a content that must be disclosed in financial reports in accordance with generally accepted accounting principles and other laws and regulations. Voluntary disclosure is the content of voluntary disclosure by public accounting principles and other laws and regulations that are not required.

This paper intends to explore the issue of mandatory disclosure and voluntary disclosure of accounting information by means of "face to face phenomenon".

In the contemporary complex and highly uncertain society, the existing economic theories sometimes fail to explain some modern problems reasonably and fully.

In such a case, it is better to suspend theory and face all kinds of phenomena in reality directly.

Only after the intuitive understanding of the phenomenon can we have the correct theoretical construction, that is, starting from the various special phenomena appearing in reality, we can examine and develop the existing theories through in-depth analysis of the phenomena.

In practice, it is an international practice to control accounting information disclosed in financial reports.

All countries make accounting standards or accounting systems according to their actual conditions to standardize the disclosure of information.

The International Accounting Standards Committee (IASC) stipulates its objectives in the Charter as follows: in the public interest, it formulates and releases accounting standards that should be followed in the preparation of financial statements, and promotes the acceptance and compliance of these guidelines worldwide.

The US Financial Accounting Standards Committee (FASB) has also established a large number of accounting standards for information disclosure.

At present, China Securities Regulatory Commission has conducted in-depth research on improving the standard of information disclosure, and issued "opinions on improving the information disclosure standards of public offering securities companies", and redesigned our country's information disclosure standard system.

At the same time, people pay more and more attention to voluntary disclosure.

In 1994, the Special Committee on financial reporting of the American Institute of Certified Public Accountants (AICPA) suggested that information on voluntary disclosure of companies be studied. In 2000, FASB set up a voluntary disclosure group of enterprise reporting research plan, and concerned about and studied the voluntary disclosure of large companies in eight major industries. It was found that more and more information was voluntarily disclosed to investors by large companies.

In April 2001, the working group published a research report entitled "improving the enterprise report - strengthening the voluntary disclosure". It mainly discussed that under the current new economic situation, according to the characteristics of different industries, the voluntary disclosure of information in other financial reports should include the non-financial information that users pay special attention to, and provide a framework for enterprises to disclose information voluntarily.

Two, the existing theoretical analysis: (1) the theoretical basis of mandatory disclosure, 1. accounting information asymmetry.

Company managers have information superiority compared with investors. They know more about the company's actual situation than investors.

Because of the limited rationality and opportunism tendencies of managers, they may gloss over accounting information or even provide false accounting information. Therefore, it is necessary to regulate accounting information, which is also an inherent requirement for achieving equity in capital market.

2. characteristics of public goods in financial reporting.

The financial report has two characteristics of public goods: it has no exclusiveness, that is, a person's use of financial reports does not exclude the right of others to use.

The supply side of public goods can not pfer production costs to consumers, and there is a shortage of supply. Therefore, regulation is needed.

For financial reporting, the government should decide on the basis of cost-benefit analysis that the content of information should be disclosed.

The 3. company is a monopoly provider of accounting information.

In a non regulated accounting information market, a company is a monopoly supplier of accounting information. It not only restricts the output of accounting information, but also sells accounting information at monopoly prices.

Letting everyone buy the same information will lead to a waste of social resources, while mandatory disclosure can greatly reduce the cost of investors.

(two) the theoretical basis of voluntary disclosure: 1. agent theory.

The agency theory assumes that the parties to the agency pursue the maximization of their own interests, and the company is connected by agency relationship, one of which is the agency relationship between managers and owners.

Managers and owners are not exactly the same target. They have some conflicts. Contracts are a way to reduce such conflicts.

The effective execution of contracts will lead to agency costs such as supervision costs, guarantee costs and residual losses. Generally, agency costs are assumed by managers. Managers need to reduce agency costs, so they have the motive to voluntarily disclose financial information.

The 2. signal theory and the competitiveness of the capital market.

According to signaling theory, high quality companies will distinguish them from those secondary businesses by pmitting signals, and the stock price will go up and enterprises will attract more investment.

Because capital is scarce, and capital market is competitive, and the competition between product market and manager market, business managers have the motivation to voluntarily disclose reliable and relevant information.

The essence of the relationship between mandatory disclosure and voluntary disclosure is three. The above analyzes the reality and the theoretical basis of mandatory disclosure and voluntary disclosure.

In reality, two kinds of disclosure systems exist, and the following is the analysis and exposition of the problem from the origin of the information disclosure system.

An important contribution of modern property rights theory is to distinguish the different meanings of property rights and real rights.

Coase, the founder of property economics, holds that the theory of property rights is determined by the existence of legitimate rights rather than the legitimate rights of owners.

Following Coase's theoretical logic, we find that property rights and real rights are different.

The difference between property rights and real rights indicates that the exercise of property rights will be restricted. The limitation of property rights may come from the decomposition of property rights. The decomposition of property rights means that there are multiple rights in the same property right structure. Each right exceeds its prescribed scope of exercise and will be restricted by other rights and interests. The restriction of property rights exercise also comes from the rational choice of human beings.

If the exercise of property rights is not restricted, the pursuit of selfish interests will lead to the intensification of conflicts between people, which in turn will damage the interests of individuals themselves.

It can be seen that the basic connotation of property rights is to recognize the rationality and legality of a person's pursuit and protection of his own rights and interests. Meanwhile, he emphasizes the importance of respecting and protecting the rights and interests of others in the exercise of property rights. Therefore, the diversification of corporate governance in modern corporate governance theory is the logical extension of the connotation of modern property rights theory.

Modern corporate governance theory holds that the main body of corporate governance is the individual or group that lives together with the enterprise, whose interests are closely related to the overall interests of the enterprise, such as shareholders, board of directors, management authorities, employees, governments, creditors and so on.

The whole process of corporate governance is inseparable from information, including financial information, and the results of corporate governance should be reflected in the company's financial results (financial performance) and financial status.

To prevent digital games in the stock market, the blue ribbon Commission, which was jointly established by the New York stock exchange and the Securities Exchange Association of the United States, submitted a report and recommendations on improving the effectiveness of the audit committee in 1999 through theoretical research and strict hearings. In this report, it stressed that the important goal of a good corporate governance structure is to produce high-quality financial reports.

The main body of modern corporate governance is "stakeholders". Therefore, the provision of financial reports, namely information disclosure, is the result of the game between stakeholders in the pursuit of maximizing their own interests.

The institutional root of 1. mandatory disclosure.

Historically, investment overheated before 1900, investors often invest in a prospectus arbitrarily formulated by the management, and do not realize all kinds of uncertainties after the investment. Therefore, the contract does not indicate that the management authorities should provide accounting information. Therefore, the right to define the ownership of accounting information is entirely controlled by the management authorities. When investors realize the importance of accounting information, the cumulative effect of the initial definition of accounting information begins to show its unique stubbornness, that is, it is difficult to change the situation in the short term. With the decentralization of shares, the shareholders' "rational apathy" and "free riding" psychology make the control rights of enterprises actually owned by the management authorities, and naturally control the provision of accounting information.

According to the above analysis, business management and other stakeholders are in a strong position in the game of accounting information, while other stakeholders, such as investors, creditors and governments, are in a weak position. This will affect the benign pformation of capital market and social development, so the intervention of protecting the weak external force is inevitable. This is regulation.

To control accounting information, in order to reduce the inefficiency caused by opportunism and bounded rationality, is the institutional root of mandatory disclosure.

The institutional root of voluntary disclosure is 2..

With the development of economy, a series of changes have taken place in the whole economic environment: the development of economic globalization has led to the global expansion of capital market, and the mode of enterprise financing has shifted from internal to external. Enterprises have to provide more and more pparent information to attract more capital.

PWC's "opaque index" survey shows that there is a direct relationship between the pparency of a country and its capital cost. The higher the pparency, the lower the cost of capital.

The increase in the number of investors.

According to the survey, about 50% of American households hold stocks directly or indirectly, and about 10% of them have stock options.

With the increase of investors and the improvement of investors' quality, investors are more concerned about the operation of enterprises and increase the demand for accounting information.

The increasing trend of the middle class worldwide will also lead to this phenomenon in other countries.

The credibility of an enterprise is a key factor in its success in competition.

Under the competitive pressure of the manager market, managers have the motivation to improve their business performance and competitiveness, so they will provide relevant information to investors and creditors faithfully and reliably, so as to enhance their reputation and competitiveness.

With the change of the economic environment, we can see that the bargaining power of investors, creditors and other stakeholders are increasing. The status of the management and other stakeholders in the game of accounting information has been improved. The management will certainly consider their interests more, which is the fundamental reason for the voluntary disclosure of the management.

In summary, the disclosure of accounting information is the result of the game among stakeholders. Mandatory disclosure and voluntary disclosure seem to be contradictory concepts. But in essence, the two disclosure systems are intrinsically linked, and the choice of mandatory disclosure and voluntary disclosure is aimed at improving the quality of accounting information.

The main factors that affect this arrangement are: the inherent requirements of economic development; the development history and current situation of capital markets in various countries; and the characteristics of laws, regulations and culture.

Each country should decide on the choice of mandatory disclosure and voluntary disclosure according to its specific circumstances.

Four, suggestions and assumptions, from the outside, our market system is developing. Capital market, product market and manager market are not yet mature. Laws and regulations and market supervision need to be further perfected. The phenomenon of accounting information distortion is widespread. From the inside perspective, the corporate governance structure is not perfect, the stock market is very concentrated, and the stock ownership is very concentrated, and the enterprises lack the power to disclose more and more pparent information voluntarily.

Therefore, at present, we should vigorously develop the securities market, improve the corporate governance structure, further standardize the market and standardize information disclosure. At the same time, we should encourage enterprises to make appropriate voluntary disclosure, including disclosing some predictable, forward-looking information and the intention of the management authorities.

With the development of economic globalization and the further standardization of the market, the voluntary disclosure of enterprises will increase in order to adapt to the complex and highly uncertain economic environment.

But voluntary disclosure will not be as arbitrary as it was before 1930s.