Curbing Opportunism With Transparency: Evidence From China's Mandatory Customer Disclosure Regulation

Wenting Zhang

Pacific Economic Review, 2026, vol. 31, issue 2, 137-155

Abstract: This study examines the governance effect of the China Securities Regulatory Commission's 2021 regulation mandating the disclosure of specific customer names. Using a Difference‐in‐Differences approach, we find that the regulatory mandate significantly suppresses the scale of insider selling. Mechanism tests reveal two distinct channels: (1) the “Regulatory Screening” channel, where the inhibitory effect is more pronounced in firms that maintained anonymity than in those that complied; and (2) the “Information Asymmetry” channel, evidenced by a reduction in bid‐ask spreads. Further analysis shows that the policy is most effective in innovation‐driven sectors (e.g., high‐tech, R&D‐intensive firms) where supply chain information is highly sensitive, and in firms with severe agency problems. Conversely, the impact is attenuated in firms that already possess robust monitoring mechanisms, such as high institutional or controlling shareholder ownership. Our results highlight the role of mandatory supply chain disclosure as a robust governance mechanism in curbing opportunistic insider behaviour.

Date: 2026
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