The impact of strengthening government auditing supervision on fiscal sustainability: Evidence from China's auditing vertical management reform

Hongjie Cao, Meina Li, Yuqi Lu and Yang Xu

Finance Research Letters, 2022, vol. 47, issue PB

Abstract: Government audit supervision is an important part of the national governance system, which has an important impact on government behavior. Taking the 2015 audit vertical management pilot reform implemented in China as a quasi-natural experiment, we adopt the differences-in-differences (DID) method to empirically examine the impact of the strengthening of externality and independence of government audit supervision on fiscal sustainability. The results show that the audit vertical management reform policy significantly reduces the fiscal deficit ratio and leads to the improvement of fiscal sustainability in reform pilot areas. This study not only enriches the research on the relationship between government oversight and fiscal sustainability, but also provides new evidence for the governance of decentralized developing countries.

Keywords: Government supervision; Fiscal sustainability; Audit vertical management; Deficit ratio (search for similar items in EconPapers)
JEL-codes: G28 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:47:y:2022:i:pb:s154461232200126x

DOI: 10.1016/j.frl.2022.102825

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