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Does credit information sharing mitigate corporate leverage manipulation? Evidence from the construction of the social credit system in China

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  • Xu, Wenshuai
  • Wang, Zhongyang
  • He, Jiaqiong

Abstract

Sharing mechanisms are crucial for the effectiveness of credit information. Using the construction of the social credit system (CSCS) in China as an exogenous shock, we find that credit information sharing significantly reduces firms' leverage manipulation. Mechanism analysis suggests that credit information sharing reduces firms' financing constraints and strengthens corporate governance, thereby inhibiting leverage manipulation. Cross-sectional analysis reveals that the impact of CSCS on leverage manipulation is more pronounced in firms with weaker corporate governance and more limited analyst coverage, as well as those headquartered in regions with lower bank competition and less developed financial markets. Overall, these results contribute to our understanding of the critical role of credit information sharing in shaping firms' leverage manipulation behavior.

Suggested Citation

  • Xu, Wenshuai & Wang, Zhongyang & He, Jiaqiong, 2026. "Does credit information sharing mitigate corporate leverage manipulation? Evidence from the construction of the social credit system in China," Research in International Business and Finance, Elsevier, vol. 86(C).
    • Handle: RePEc:eee:riibaf:v:86:y:2026:i:c:s0275531926001030
    DOI: 10.1016/j.ribaf.2026.103376
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