Legal shifts and corporate strategy: The impact of China’s New Securities Law on earnings management

IF 3.9 3区经济学 Q1 BUSINESS, FINANCE

North American Journal of Economics and Finance Pub Date : 2025-08-05 DOI:10.1016/j.najef.2025.102507

Yikai Zhao, Shutong Zhang , Xinyi Geng

引用次数: 0

Abstract

This study examines the impact of China’s New Securities Law (NSL) on real earnings management (REM) practices among listed companies. Employing a difference-in-differences (DID) approach, we find that the implementation of NSL significantly reduces REM activities. Our results remain robust after addressing concerns about unobserved confounders and a series of robustness checks. Further analysis shows that this effect is driven by enhanced internal control, improved audit quality, and increased retail investor monitoring. The reduction in REM is more pronounced in SOEs, firms with stronger board independence, abnormal audit fees, and higher executive pay. These findings highlight the policy significance of broad legal reforms beyond accounting standards in shaping corporate behavior and governance in emerging markets.

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法律变迁与公司战略：中国新证券法对盈余管理的影响

本研究探讨了中国新证券法对上市公司真实盈余管理实践的影响。采用差异中的差异（DID）方法，我们发现NSL的实施显著减少了REM活动。在解决了对未观察到的混杂因素的担忧和一系列稳健性检查后，我们的结果仍然稳健。进一步的分析表明，这种效应是由内部控制的加强、审计质量的提高和散户投资者监督的增加所驱动的。REM的减少在国有企业中更为明显，这些企业拥有更强的董事会独立性、不正常的审计费用和更高的高管薪酬。这些发现凸显了会计准则之外的广泛法律改革在塑造新兴市场公司行为和治理方面的政策意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

North American Journal of Economics and Finance Multiple-

CiteScore

7.30

自引率

8.30%

发文量

168

期刊介绍： The focus of the North-American Journal of Economics and Finance is on the economics of integration of goods, services, financial markets, at both regional and global levels with the role of economic policy in that process playing an important role. Both theoretical and empirical papers are welcome. Empirical and policy-related papers that rely on data and the experiences of countries outside North America are also welcome. Papers should offer concrete lessons about the ongoing process of globalization, or policy implications about how governments, domestic or international institutions, can improve the coordination of their activities. Empirical analysis should be capable of replication. Authors of accepted papers will be encouraged to supply data and computer programs.