The Implementation of the Government Financial Reporting System and Enterprise Investment Efficiency

To explore the economic governance effects of the implementation of the government financial reporting system, this study constructs a quasi-natural experiment based on the pilot trial of government financial reporting initiated by the Ministry of Finance. A multi-period difference-in-differences (DID) model is constructed to examine the impact of the system’s implementation on enterprise investment efficiency and its underlying mechanisms. The findings reveal that the implementation of the government financial reporting system significantly enhances enterprise investment efficiency. Pathway analysis indicates that this improvement operates through the channel of increased government investment efficiency. However, this transmission mechanism is moderated by institutional and behavioral factors such as GDP growth pressure, intergovernmental competition, and soft budget constraints. Heterogeneity analysis further demonstrates that the positive impact of the system’s implementation on enterprise investment efficiency is more pronounced in state-owned enterprises (SOEs), industries with higher competition intensity, and economically developed regions. Identifying and verifying the economic governance effects of implementing the government financial reporting system holds significant theoretical and practical implications for advancing the organic synergy between a well-functioning government and an efficient market, thereby further enhancing the macroeconomic governance capabilities of governments.