Legal Liability for Voluntary Disclosure and Management Forecast Accuracy: Quasi-Experimental Evidence from China’s Revised Securities Law

Against the global debate over mandatory versus voluntary corporate disclosure, this study investigates whether strengthened legal accountability can sustain credible voluntary forward-looking information in emerging markets. Exploiting China’s Revised Securities Law (effective March 2020) as a quasi-natural experiment, which granted formal legal status to voluntary disclosure while substantially raising litigation risks for misleading statements, this paper examines the reform’s effect on management earnings-forecast accuracy. Given uniform nationwide implementation, I adopt an exposure-based difference-in-differences design using pre-reform firm-level voluntary forecasting intensity. Based on Chinese A-share listed firms over 2011–2023, I find that firms with higher pre-reform voluntary forecasting intensity exhibit significantly smaller forecast errors after the reform. The improvement is accompanied by less earnings management used to meet forecast targets and by higher-quality communication on stock-exchange investor platforms, consistent with two channels. The gains are concentrated in optimistic forecasts, with larger point estimates among firms with severe agency frictions. Stricter legal liability can thus sustain the credibility of the voluntary forecasts that firms choose to issue, with investor-firm communication infrastructure playing a complementary role.