Analysis of the Impact of Tighter Information Disclosure Regulation on Corporate Governance and Investment Decisions of A-Share Listed Companies

Based on the above research materials, I will provide you with a comprehensive analysis report on the impact of tighter information disclosure regulation on the A-Share market.

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At the start of 2026, the A-Share market continued and deepened the “zero tolerance” high-pressure regulatory stance that has been in place since 2025. According to statistics from 21st Century Business Herald, over 80 companies were placed under investigation for information disclosure violations throughout 2025, and nearly 80 listed companies received administrative penalty decisions, among which 15 triggered the red line for mandatory delisting due to major violations, hitting a historical record [1]. Within the first 9 working days of 2026, at least 6 listed companies have received regulatory fines or investigation notices, including

[2].

This series of actions indicates that the new regulatory norm, which purifies the market environment through “delisting all eligible companies” and severely punishes illegal entities through “holding individuals accountable”, has been established. Its core logic is shifting towards the in-depth reshaping, deterrence, and prevention of the entire market chain and ecosystem [2].

The Measures for the Implementation of Regulatory Measures by the China Securities Regulatory Commission (CSRC), which came into effect on June 30, 2026, marks a significant improvement in the standardization of regulatory law enforcement [3]. The Measures specify 14 types of commonly used regulatory measures, including ordering corrections, regulatory interviews, issuing warning letters, and ordering regular reports, and establish a rapid response mechanism for emergency situations to ensure timely risk disposal under special circumstances.

Notably, regulators have adopted a strategy of “pursuing the principal culprits and punishing accomplices”, imposing heavy penalties not only on principal culprits such as actual controllers and chairmen of the board, but also investigating the “ecosystem” that assists in fraud, forming a complete chain of accountability [2].

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Tighter regulation is driving the optimization of corporate governance structures of listed companies from the following dimensions:

Governance Dimension	Trend of Change	Specific Performance
Board Independence	Strengthened	Enhanced support for independent directors in performing their duties; improved functions of specialized committees
Internal Control	Tightened	Regular inspections by internal audit institutions; strengthened control over subsidiaries
Related Party Transaction Management	Standardized	Dynamic maintenance of related party lists; real-time verification of transactions
Accountability of Senior Executives	Implemented	Full-cycle management of salary assessments; post-accountability mechanism after departure

Regulators have clearly required that if a controlling shareholder or actual controller concurrently serves as the company’s chairman and general manager, the company shall explain the rationality of such an arrangement and the measures to ensure independence [4].

As can be seen from the Luqiao Information case, regulators are using the strictest measures to force enterprises to establish internal control genes of “dare not fake, cannot fake” [5]. Luqiao Information inflated its profits by a total of RMB 37.7663 million from 2023 to 2024. The Xiamen Securities Regulatory Bureau imposed a total fine of RMB 15.5 million on 8 responsible persons, among whom 2 were also subject to a 3-year securities market entry ban, and 11 other responsible persons were issued administrative regulatory measures in the form of warning letters [5].

This “hierarchical” division of accountability, with individual fines ranging from RMB 3.5 million to RMB 750,000, matches the identities and roles of the responsible persons, conforms to the principle of “proportionate punishment for offenses” in the new Securities Law, and provides a clear expectation to the market that the cost of fraud is no longer at the “hundreds of thousands of yuan” level [5].

The ST Huilun case shows that related party fund occupation has become a key focus of regulatory investigations. Even if a listed company repays the occupied funds and interest before a regulatory investigation is initiated, it is still highly likely to be punished [2]. This means that listed companies must no longer harbor the lucky mentality of “temporarily occupying funds, concealing it, and thinking everything will be fine after quietly repaying the funds”.

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Tighter regulation helps improve the pricing efficiency of the A-Share market. When information transparency is enhanced, investors can more accurately assess enterprise value. High-quality companies receive valuation premiums, while problematic companies face valuation discounts. This differentiation will guide capital flows to enterprises that truly create value.

The risk of information disclosure violations is becoming an unavoidable systemic risk factor in investment decisions:

: After the release of regulatory warning letters or investigation announcements, the company’s stock price usually falls significantly. Take Jingshan Light Machinery as an example: after being designated as ST and resuming trading, it faced pressure from institutional liquidation, the price limit was reduced to 5%, and liquidity contraction further amplified volatility [6].

: Administrative punishment is only the “first shoe to drop”; subsequent “second and third shoes” such as civil claims, goodwill impairment, tightened bank credit lines, and loss of customer orders have not yet materialized [5]. Investors should not blindly bottom-fish companies that are claimed to have “fully released negative news”.

Strategy Dimension	Adjustment Recommendations
Stock Selection Logic	Prioritize companies with sound governance structures and high-quality information disclosure
Position Management	Establish risk ledgers and regularly sort through announcements of held stocks
Exit Mechanism	Resolutely cut losses once signals such as regulatory investigations or performance revisions appear
Diversified Investment	Avoid excessive concentration in a single industry or individual stock

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Based on research using the MacBERT-Transformer multimodal fusion model, the importance analysis of the top 10 key SHAP features is as follows [7]:

┌─────────────────────────────────────────────────────────────────┐
│              Ranking of Feature Importance for Financial Fraud Identification (SHAP Values)              │
├─────────────────────────────────────────────────────────────────┤
│  1. Accrual Ratio (ACCRUAL)    ████████████████████████████ Highest   │
│  2. Asset-Liability Ratio (LEV)        ████████████████████████████        │
│  3. Operating Cash Flow Ratio (CFO_NI) ██████████████████████████         │
│  4. Return on Equity (ROE)    ████████████████████████           │
│  5. Revenue Growth Rate (GROWTH)     ██████████████████████             │
│  6. Information Disclosure Consistency (DISC)   █████████████████████              │
│  7. Management Tone Positivity (TONE) ████████████████████               │
│  8. Asset Turnover Ratio (TURN)       ███████████████████                 │
│  9. Financial Distress Index (Z_SCORE)  ██████████████████                  │
│  10. Earnings Manipulation Index (M_SCORE)  █████████████████                  │
└─────────────────────────────────────────────────────────────────┘

:

1. Profit-Cash Flow Dissonance
   : High growth in net profit but sustained negative operating cash flow
2. High Leverage Risk
   : Asset-liability ratio significantly higher than the industry average
3. Abnormal Revenue Growth
   : Revenue growth far exceeding the industry average but lacking support from core orders
4. Deteriorating Earnings Quality
   : Excessively high proportion of accrual profits, low profit quality
5. Subsidiary Risks
   : High proportion of revenue from subsidiaries, or a state of “high profitability but low cash flow”

Investors should focus on the following risk warning announcements [6]:

Announcement Type	Risk Level	Response Strategy
Investigation Announcement	⚠️ Extremely High	Immediately assess holdings and liquidate if necessary
Advance Notice of Administrative Penalty	⚠️ Extremely High	Assess delisting risk and prepare claim materials
Performance Forecast Revision	🔶 High	Verify the reasons for performance changes
Unqualified Opinion from Audit Institution	🔶 High	Gain in-depth understanding of audit concerns
Regulatory Letter/Warning Letter	🟡 Medium	Monitor the nature of the issue and rectification progress

According to research data, the following industries have a higher risk of information disclosure violations [8]:

• High-Risk Industries
  : Coal, basic chemicals, power equipment, biomedicine, agriculture, forestry, animal husbandry, and fishery
• Common Types of Violations
  : Concealment of environmental penalty information, non-related party treatment of related transactions, financial fraud by subsidiaries

In terms of environmental information disclosure, many listed companies have repeatedly crossed the “ecological red line” while achieving performance growth, but some companies are suspected of “incomplete, untimely, or even non-disclosure” of environmental information [8].

Modern NLP technology provides investors with new risk identification tools. The multimodal model based on MacBERT-Transformer has an F1 score of 0.887 and an AUC of 0.938 [7]. This model identifies risks by analyzing:

• Information Disclosure Consistency (DISC_CONS)
  : Inconsistent content in reports of fraudulent enterprises, insufficient information transparency
• Management Tone Positivity (TONE)
  : This indicator is significantly lower for fraudulent enterprises

Investors can pay attention to abnormal text expressions in annual reports and announcements of listed companies, such as changes in wording, ambiguous expressions, and contradictory statements.

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: In 2020, it made payments to 7 companies in the name of procurement, with the funds ultimately transferred to accounts of related parties such as the actual controller, totaling RMB 28.33 million which was not disclosed; to cover up this act, it inflated revenue by RMB 25.49 million and RMB 62.33 million in 2021 and 2022 respectively through fictitious procurement and sales and improper revenue recognition [2].

: The company and related responsible persons were fined a total of RMB 11.4 million, of which ST Huilun was fined RMB 3 million, and the actual controller and then-chairman of the board were fined RMB 4 million [2].

: Related party fund occupation has become a key focus of regulatory investigations, and even if the funds are repaid afterwards, the company cannot avoid punishment.

: It conducted non-physical trade with controlled shell companies. By engaging in trade chains without commercial substance and fictitious closed-loop sales repurchases, it inflated revenue by RMB 157 million, inflated operating costs by RMB 158 million, and understated total profits by RMB 1.6629 million in the first half of 2023 [2].

: Complex trade structures are often breeding grounds for financial fraud. Investors need to be vigilant about abnormal patterns of “increasing revenue without increasing profits”.

: Its subsidiary, Huida Cheng, inflated profits by RMB 46.7046 million in 2018 through signing fake contracts with customers and recognizing revenue from contracts that were not actually performed, accounting for 25.49% of the total disclosed profits for the period [6].

: The company was fined RMB 5 million, and three senior executives were each fined RMB 2.5 million [6].

: After being designated as ST and resuming trading, the stock faced pressure from institutional liquidation, the price limit was reduced to 5%, and 100,000 shareholders were caught in the trap [6].

: Investors need to focus on the shareholding structure, revenue proportion, and related party transactions of subsidiaries, especially those with “high profitability but low cash flow”.

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                    ┌──────────────────┐
                    │ Information Disclosure Risk Identification │
                    └────────┬─────────┘
        ┌────────────────────┼────────────────────┐
        ▼                    ▼                    ▼
   ┌─────────┐        ┌─────────────┐       ┌──────────┐
   │Financial Dimension │        │ Announcement Dimension    │       │Industry Dimension  │
   └────┬────┘        └──────┬──────┘       └────┬─────┘
        │                    │                   │
   • Profit-Cash Flow Matching Degree      • Regulatory Penalty Records      • Industry Violation Frequency
   • Asset-Liability Structure            • Performance Revision Frequency      • Policy Regulatory Focus
   • Revenue Quality               • Audit Opinion Type      • Industrial Chain Risk Transmission
   • Subsidiary Financial Status          • Related Party Transaction Disclosure      • Environmental Compliance Risk

It is recommended that investors spend a fixed amount of time each week sorting through announcements of their held stocks, focusing on the following [6]:

1. Investigation Announcements
   : Assess whether the delisting red line has been triggered
2. Administrative Penalty Decisions
   : Pay attention to the fine amount and scope of accountability
3. Performance Forecast Revisions
   : Be alert to significant performance “U-turns”
4. Unqualified Audit Opinions
   : Understand the focus of the audit institution’s concerns
5. Share Pledge and Reduction Announcements
   : Pay attention to the behavioral motives of the actual controller

Investor Type	Strategy Recommendations
Conservative	Avoid all companies with violation records; it is better to miss opportunities than to take risks
Moderate	Establish a white list and only invest in companies with sound governance structures and high-quality information disclosure
Aggressive	On the basis of thorough due diligence, moderately seize opportunities of “fully released negative news”, but set stop-loss mechanisms

In accordance with the Provisions of the Supreme People’s Court on Cases of Civil Compensation for Securities Misrepresentation Tort, eligible investors can file claims in accordance with the law [5]. Taking the Luqiao Information case as an example, investors who bought the stock between April 30, 2024, and October 14, 2025, and still held the stock as of the disclosure date of the investigation have preliminary claim qualifications [5].

Investors should:

1. Keep complete transaction records
2. Record position costs and quantities
3. Pay attention to the statute of limitations and competent court
4. Seek assistance from professional lawyers if necessary

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1. Regulatory Normalization
   : The new regulatory norm based on a “zero tolerance” principle has been established, and the high-pressure stance will continue in 2026
2. Governance Upgrade
   : Tighter regulation is driving the optimization of corporate governance structures of listed companies, and a pattern of “dare not fake, cannot fake” is taking shape
3. Risk Repricing
   : The risk of information disclosure violations is becoming an important consideration in investment decisions, and market pricing efficiency is expected to improve
4. Diversified Identification Methods
   : Multi-dimensional methods such as financial indicators, announcement analysis, industry characteristics, and text analysis can be used comprehensively

Looking ahead to 2026, regulators will continue to focus on serious illegal acts such as financial fraud, fraudulent issuance, market manipulation, and insider trading. While maintaining a high-pressure law enforcement stance, they will also attach greater importance to improving pre-event constraints and in-process regulatory mechanisms [9]. Specific measures include:

• Increasing the frequency of on-site supervision
• Strengthening information disclosure reviews of listed companies
• Promoting the construction of internal governance and compliance management systems for enterprises
• Establishing a “regulatory data direct connection” to break data silos

For investors, enhancing self-protection awareness, maintaining rational judgment, focusing on core fundamental indicators, and taking every risk warning signal seriously are the keys to avoiding financial traps and protecting asset safety in a complex and volatile market environment.

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[1] 21st Century Business Herald - Platinum Power, a leader in a 100-billion-yuan track, placed under investigation for information disclosure violations

[2] 21st Century Business Herald - 6 fines at the start of the year reveal the new regulatory norm of the A-Share market

[3] Shanxi Securities Regulatory Bureau - CSRC issues Measures for the Implementation of Regulatory Measures

[4] JZ Valuation View - Interpretation of the revised new regulations for listed companies

[5] China Business Journal - The “first fine” for financial fraud in 2026 falls on Luqiao Information

[6] NetEase - Another corporate giant designated as ST due to financial fraud

[7] China Securities Journal - Research on Financial Fraud Identification of Listed Enterprises Based on MacBERT-Transformer Multimodal Fusion

[8] Securities Times - Environmental information disclosure system needs to be refined and implemented urgently

[9] Lexology - Review of 2025 Securities Regulatory Penalties and Judicial Practices