The impact of regulatory design change on financial reporting outcomes: Evidence from a Quasi-natural experiment

초록

We investigate the impact of the financial supervisory architecture on financial reporting outcomes by exploiting a quasi-natural experiment in Korea. In 2008, Korea consolidated financial policy-making and supervisory functions into a single entity. Employing a difference-indifferences approach with cross-country data, we provide novel evidence indicating that the financial reporting quality of Korean firms significantly declined following this consolidation, relative to countries without similar structural changes. This finding remains robust after explicitly accounting for potential confounding effects arising from differences in economic, firmspecific, and regulatory characteristics. Our findings suggest that regulatory design is an important determinant of reporting decisions.

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