Financial Reporting Quality and International Trade

62 Pages Posted: 26 Apr 2021 Last revised: 27 Dec 2021

See all articles by Yuqing Zhou

Yuqing Zhou

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Date Written: December 25, 2021


This paper examines the effects of financial reporting quality on exports and imports. I begin by using survey data from executives to measure accounting quality and conduct country-sector-level analyses. I find that a one standard deviation increase in financial reporting quality in a country is associated with increases in manufacturing exports and imports of 3.6 percent and 4.5 percent, respectively. I then exploit a reporting regulation change in China and use administrative firm-level international trade data to conduct differences-in-differences and triple-difference analyses. These results show that treated firms export 15.3 percent more after the financial reporting reform. They also export to more countries and export more types of goods after the reform. Next, I provide evidence for potential mechanisms for these effects; specifically, improvements in financial reporting quality (i) facilitate communication among people of different cultures, (ii) decrease information asymmetry between trade partners, and (iii) help firms raise external capital. This paper extends understanding of the real economic effects of financial disclosure and provides a potential link between information transparency and global economic growth.

Keywords: Financial Reporting Quality, International Trade, Information Asymmetry

JEL Classification: G14; F65

Suggested Citation

Zhou, Yuqing, Financial Reporting Quality and International Trade (December 25, 2021). Available at SSRN: or

Yuqing Zhou (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong


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