Corporate disclosure quality and financing constraints: Evidence from chinese listed companies

Abstract

Information asymmetry is a fundamental cause of corporate financing constraints in emerging markets. As a key mechanism for reducing such frictions, the role and heterogeneous effects of information disclosure warrant systematic investigation. This study examines A-share listed companies in China from 2009 to 2023, applying a firm-year two-way fixed effects model to assess the impact of disclosure quality on financing constraints and its underlying mechanisms. The results show that higher-quality disclosure significantly reduces corporate financing constraints, and this finding is robust across multiple test specifications. Mechanism analysis indicates that disclosure alleviates financing constraints through three channels, thus strengthening internal control systems, enhancing corporate reputation, and improving external supervision. This leads to combined effects of governance improvement and market signaling. Notably, heterogeneity tests show that the mitigating effect of disclosure quality is stronger for nonstate-owned enterprises, firms located in central and western regions, and smaller enterprises. This study contributes to the theory linking disclosure quality and financing constraints. Practically, it offers policy implications for improving disclosure systems and sustaining the long-term health of capital market ecosystems in emerging economies.