The impact of capital market opening on earnings management: Empirical evidence based on Land- Port Connection

This paper makes use of the quasi-natural experiment of the stock market interconnection mechanism between the mainland and Hong Kong, and takes the earnings management behavior of listed companies as the observation object, this paper empirically tests the corporate governance effect of the opening of our country's capital market with the multi-time-point double difference model. The study finds that the capital market connectivity mechanism can significantly inhibit the earnings management behavior of Shanghai, Shenzhen and Hong Kong stock connect listed companies. Further analysis shows that Information asymmetry is a potential constraint on earnings management.

Automated summary

This paper uses the quasi-natural experiment of the stock market interconnection mechanism between the mainland and Hong Kong, and investigates the corporate governance effect of the opening of China's capital market on earnings management behavior of listed companies. The study finds that the capital market connectivity mechanism can significantly inhibit the earnings management behavior of Shanghai, Shenzhen, and Hong Kong stock connect listed companies. Further analysis suggests that information asymmetry serves as a potential constraint on earnings management.