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Government debt accountability supervision and corporate stock price volatility

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  • Liu, Guangqiang
  • Kong, Lingyao
  • Du, Jingjing

Abstract

Government debt accountability supervision (GDAS) is not only an important institutional innovation for preventing and resolving fiscal risks, but also an important policy tool that affects capital market stability and improves the level of corporate governance. Using typical cases of public accountability for local governments' implicit debt as notified by the Ministry of Finance of China as a quasi-natural experiment, this study adopts a staggered difference-in-differences (DID) method to examine the impact of GDAS on corporate stock price volatility (SPV). The results show that GDAS can effectively inhibit corporate SPV. Mechanism analyses indicate that GDAS mainly suppresses corporate SPV by reducing operational risks and improving market expectations. Heterogeneity analyses reveal that the inhibitory effect is mainly observed in enterprises with a poor legal environment, weak internal governance, and high media attention. In addition, GDAS alleviates enterprises' financing difficulties by reducing corporate SPV. The research conclusions not only help to deepen the understanding of the functions of the financial accounting supervision system, but also provide empirical support and policy references for promoting local debt governance and the healthy development of the capital market.

Suggested Citation

  • Liu, Guangqiang & Kong, Lingyao & Du, Jingjing, 2026. "Government debt accountability supervision and corporate stock price volatility," Pacific-Basin Finance Journal, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:pacfin:v:98:y:2026:i:c:s0927538x26000831
    DOI: 10.1016/j.pacfin.2026.103137
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