Abstract
This study examines the impact of Chinese stockmarket liberalization on the quality of firms' informationdisclosures. Although previous studies haveexplored the economic outcomes of stock marketliberalization, little is known about its impact on thequality of management earnings forecasts. We treatChina's Stock Connect program as a quasi‐experimentand draw data from Chinese A‐share‐listed companiesfrom 2012 to 2017. Using a staggered difference‐indifferencemodel, we find that eligible firms issue moreaccurate earnings forecasts after implementation of theConnect program compared with ineligible firms. Ourmechanism analyses show that the positive effect ismore pronounced for firms with initially opaqueinformation environment and higher ex ante agencycosts, suggesting that market liberalization facilitateshigher‐opaque firms to issue more accurate earningsforecasts to meet the information demand from foreigninvestors, and facilitates monitoring in firms with weakinternal governance, thereby improving earnings forecastsquality.
NETL
NSTL
Wiley