Corporate governance effects of state asset protection: A perspective on real earnings management

Yihong Gao, Xingyu Pan and Qiaoyan Ye

Finance Research Letters, 2023, vol. 58, issue PD

Abstract: State-owned enterprises (SOEs) play critical roles in China's economy. This paper employs difference-in-differences method to explore the corporate governance effect of state asset protection based on China's Law on State-owned Assets of Enterprises. The study finds that state asset protection reduces the real earnings management of SOEs by increasing their corporate governance level. This policy effect occurs mostly in firms with non-Big4 auditing, lower analyst following and weaker internal control quality. This paper enriches research in law and finance, expands the literature on property rights theory, and provides empirical evidence for governments to complete policies to clarify ownership in the future.

Keywords: State asset protection; Real earnings management; Corporate governance; Property rights theory (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:58:y:2023:i:pd:s1544612323010097

DOI: 10.1016/j.frl.2023.104637

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