Regularized Government Accounting Supervision and Suppliers’ Cash Holdings: Evidence from Supply Chain Spillover Effects

This article takes the reform pilot of strengthening accounting supervision carried out by the Ministry of Finance in selected provinces and municipalities at the end of 2020 as a quasi‑natural experiment, and adopts the difference‑in‑differences method to investigate the supply chain spillover effect of regularized government accounting supervision on the cash holding level of supplier firms. The study finds that when midstream firms are located in regions with the accounting supervision reform pilot, the cash holding level of their supplier firms decreases significantly. Mechanism tests show that regularized government accounting supervision functions mainly through two channels, namely reducing supply chain risks faced by suppliers and increasing the supply of trade credit. Heterogeneity analysis indicates that the above effect is more pronounced among supplier firms that are state‑owned enterprises, have high customer concentration, and belong to high‑tech industries. This research expands the research boundary of the economic consequences of government accounting supervision, reveals the microeconomic effects of external regulatory institutions transmitted through supply chain relationships, and provides empirical evidence for improving China’s accounting supervision system and enhancing the financial resilience of supply chains.