The impact of government accounting supervision on insider trading in China

This study examines how government accounting supervision influences insider trading in Chinese firms. Using data from 2007 to 2024 and a staggered difference-in-differences model, we find that accounting supervision significantly restrains insider trading, particularly insiders’ net-selling tendency. Government inspections also create strong spillover effects, discouraging insider trading even in firms not directly inspected. Mechanism analysis shows that shorter disclosure lags and higher reputational stress are key channels. The deterrent effect is stronger in non-state-owned enterprises, among top executives, and in capital-intensive industries. Overall, the results demonstrate that government accounting supervision functions as an effective external governance tool and provide policy guidance for enhancing market oversight.