How the Quota of Judges Reform Enhances Corporate Information Transparency: Evidence From China's Listed Firms

ABSTRACT Exploiting the quasi‐natural experiment of China's Quota of Judges Reform, we find that enhanced judicial quality and independence significantly improve corporate information transparency. Using panel data from Shanghai and Shenzhen A‐share listed companies from 2011 to 2022 and employing a multi‐period difference‐in‐differences approach, we document that the quota of judges reform increases corporate transparency by approximately 2.05 percentage points. This conclusion remains robust after a series of endogeneity and robustness tests. The improvement is driven by three key mechanisms: enriching judicial knowledge quantity, improving judicial knowledge quality, and enhancing judicial knowledge authority, all of which strengthen the credibility and enforceability of information disclosure regulations. The impact is more pronounced for firms that are non‐state‐owned, have low litigation risk, face high financing constraints, and exhibit high ownership concentration. This research enriches the discourse on judicial institutions and corporate behavior by demonstrating the pathways through which legal reforms enhance information transparency and market quality in emerging economies.