Full-Scope Supervision System, Accounting Information Quality, and the Corporate Information Environment

Using Chinese A-share listed firms from 2015 to 2024, this study exploits the staggered implementation of the Full-Scope Supervision System (FSS) and a multi-period difference-in-differences design to examine its effect on accounting information quality, measured by the absolute value of discretionary accruals (AbsDA). The results show that FSS significantly reduces AbsDA, indicating improved reporting quality and less earnings manipulation. The effect is stronger among firms with greater digital transformation, higher ownership concentration, lower analyst attention, and weaker information environments. Mechanism evidence points primarily to improvements in the information environment, while the role of analyst attention is more nuanced because it reflects both monitoring and information demand. These findings identify institutional supervision as an important external governance mechanism for improving corporate reporting quality.