Stock Market Liberalization and Earnings Management: -- Evidence from the Shanghai-Hong Kong Stock Connect

Zirui Song; Yinxuan Song

doi:10.54097/hbem.v9i.9067

Authors

Zirui Song
Yinxuan Song

DOI:

https://doi.org/10.54097/hbem.v9i.9067

Keywords:

Shanghai-Hong Kong Stock Connect; Earnings Management; PSM-DID.

Abstract

Using the Shanghai-Hong Kong Stock Connect (SHHKConnect) as an exogenous shock, this paper investigates the impact of stock market liberalization on earnings management in China. By employing the propensity score matching difference-in-difference (PSM-DID) method, we find that the implementation of the SHHKConnect could lower the extent of earnings management for connected firms. The robustness check is conducted and valid. Our study contributes to a deeper understanding of the economic consequences of stock market liberalization and thereby providing implications for policymakers.

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