The Watchful Eye: Government Accounting Supervision and Its Effects on Supply Chain Finance

Abstract

This study investigates the impact of government accounting supervision on the adoption of supply chain finance (SCF) among Chinese listed firms. Using a difference‐in‐differences (DID) approach and a comprehensive dataset spanning 1999 to 2022, we find robust evidence that government accounting supervision significantly promotes the adoption of SCF. This relationship remains resilient across a battery of robustness checks, including parallel trend analysis, propensity score matching (PSM‐DID), placebo tests, and alternative sample specifications. Mechanism analysis reveals that the positive impact of government accounting supervision is primarily driven by enhanced supply chain transparency and the suppression of abnormal related‐party transactions. Furthermore, cross‐sectional analyses reveal that this effect is more pronounced in firms with higher supplier concentration or those lacking political connections. Overall, our findings offer important insights into the role of institutional oversight in fostering financial innovation and enhancing supply chain sustainability.