Summary:
Market regulation is a key instrument through which governments shape the institutional environment for firms. In China, recent reforms have emphasized a unified national market, integrated regulatory standards, and cross-departmental supervision. This paper examines whether regulatory integration improves the performance of listed firms. Regulatory integration is defined as the coordination and unification of rule-making, agency responsibilities, enforcement standards, administrative procedures, and information sharing within a specific regulatory topic. It differs from deregulation: it does not imply weaker oversight, but captures whether regulation is organized in a more coherent, predictable, and less duplicative manner. This paper constructs a novel firm-year measure of regulatory integration using large-scale regulatory and corporate texts. First, it manually collects 338,403 central regulatory documents issued between 2007 and 2023 from the PKUlaw database. These documents represent the common institutional baseline faced by firms nationwide and reveal how regulatory authority is allocated among central agencies. Second, annual reports of listed firms are used to measure each firm's exposure to various regulatory topics. The paper applies the Latent Dirichlet Allocation (LDA) topic model to regulatory texts and uses large language models to annotate and label the topics, identifying 99 regulatory topics. For each topic, integration is measured by the distribution of that topic across drafting agencies. A topic concentrated in a small number of agencies indicates more integrated authority and lower coordination costs, whereas a topic associated with many agencies suggests fragmented oversight and greater potential for duplication or inconsistency. The firm-year regulatory integration index is constructed by weighting topic-level integration scores by each firm's topic exposure derived from annual reports. After merging this measure with CSMAR financial data and excluding ST and *ST firms, the final sample contains 45805 firm-year observations of 5,323 listed firms from 2007 to 2023. Descriptive evidence shows that regulatory integration increased steadily after 2013, declined temporarily during the COVID-19 pandemic shock, and then recovered quickly. The baseline regressions examine the effect of lagged regulatory integration on firm performance, measured by return on assets (ROA) and sales growth. The models control for firm-level characteristics and include firm fixed effects and industry-by-year fixed effects, with standard errors clustered at the firm level. The results show that regulatory integration significantly improves firm performance. A one-standard-deviation increase in regulatory integration is associated with an approximately 16.74% increase in ROA and a 34.03% increase in sales growth. These findings remain robust after excluding the COVID-19 pandemic period, replacing key variables, changing LDA topic numbers and model specifications, and adding controls. The paper further addresses potential endogeneity concerns. It constructs an instrumental variable by fixing each firm's topic weights at the values observed in its first sample year and combining these baseline weights with time-varying topic-level integration. The instrumental-variable results are consistent with the baseline estimates. The paper also uses the 2018 State Council policy on accelerating the construction of a national integrated online government-service platform as a policy shock, showing that firms initially exposed to lower regulatory integration experience significant performance improvements after the policy. Heterogeneity tests show that the effect of regulatory integration is stronger in cities with better digital infrastructure, as measured by the Broadband China pilot program, and stronger for non-state-owned enterprises. Digital infrastructure facilitates information sharing and coordinated supervision, while non-state-owned firms benefit more from reductions in fragmented supervision, repeated reporting, and inconsistent standards. Mechanism tests indicate that regulatory integration improves performance by reducing operational and compliance costs, increasing regulatory consistency, and promoting innovation. It lowers administrative expense ratios and compliance-related hiring, increases the semantic similarity of regulatory texts issued by different agencies within the same topic, and raises R&D intensity and patent applications. Additional analysis shows that regulatory integration reduces regulatory penalties and litigation and increases firms' distance to default. This paper contributes by developing a firm-level measure of regulatory integration tailored to China's institutional setting, showing that an integrated regulatory framework can enhance firm performance, and providing evidence for reforms aimed at streamlining administration and strengthening cross-departmental supervision. The findings suggest that China should continue to unify regulatory items, data standards, reporting requirements, and enforcement discretion, while investing in digital regulatory infrastructure and providing targeted compliance guidance for non-state-owned firms.
何青, 姚天宇, 蒋东明. 监管一体化对上市公司绩效的影响——来自中央法规文本分析的证据[J]. 金融研究, 2026, 554(8): 114-131.
HE Qing, YAO Tianyu, JIANG Dongming. The Impact of Regulatory Integration on Listed Firm Performance: Evidence from Textual Analysis of Central Laws and Regulations. Journal of Financial Research, 2026, 554(8): 114-131.
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