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

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  • Cao, Hongjie
  • Li, Meina
  • Lu, Yuqi
  • Xu, Yang

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.

Suggested Citation

  • Cao, Hongjie & Li, Meina & Lu, Yuqi & Xu, Yang, 2022. "The impact of strengthening government auditing supervision on fiscal sustainability: Evidence from China's auditing vertical management reform," Finance Research Letters, Elsevier, vol. 47(PB).
    • Handle: RePEc:eee:finlet:v:47:y:2022:i:pb:s154461232200126x
    DOI: 10.1016/j.frl.2022.102825
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    References listed on IDEAS

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    Cited by:

    1. Ruichao Liu & Xiaoyan Zhang & Pengcheng Wang, 2022. "A Study on the Impact of Fiscal Decentralization on Green Development from the Perspective of Government Environmental Preferences," IJERPH, MDPI, vol. 19(16), pages 1-22, August.
    2. Zhao Dong & Haodong Xu & Zhifeng Zhang & Yipin Lyu & Yuqi Lu & Hongyan Duan, 2022. "Whether Green Finance Improves Green Innovation of Listed Companies—Evidence from China," IJERPH, MDPI, vol. 19(17), pages 1-23, August.
    3. Xiaoyu Li & Jiawei Tang & Chao Feng & Yexiao Chen, 2023. "Can Government Environmental Auditing Help to Improve Environmental Quality? Evidence from China," IJERPH, MDPI, vol. 20(4), pages 1-21, February.

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    More about this item

    Keywords

    Government supervision; Fiscal sustainability; Audit vertical management; Deficit ratio;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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