Local Government Debt and Firms' Supply Chain Disclosure

In the context of elevated local government debt and rising financing uncertainty, firms may alleviate financing pressures and stabilize operations by enhancing supply chain information disclosure.. Using data on Shanghai and Shenzhen A-share listed firms, this study constructs a supply chain transparency index covering the number of disclosures and business proportions of major customers and suppliers, and systematically examines the impact of local government debt expansion on firms' disclosure behavior. The results show that increases in local government debt levels are significantly positively associated with the degree of firms' supply chain information disclosure; that is, under rising local government debt pressure, firms tend to disclose information regarding their major customers and suppliers. Mechanism tests indicate that local government debt risk primarily influences disclosure decisions by raising firms' borrowing costs and shortening loan maturities, thereby strengthening firms' need to reduce information asymmetry and stabilize financing expectations. Further analysis shows that the disclosure response is weaker for firms with more internal financial assets and and stronger liquidity buffers; the marginal effect of local government debt pressure on voluntary disclosure weakens when financial market attention and external monitoring are stronger. The effect is more pronounced in industries with low concentration, more intense competition, or weak backward linkages. This study reveals the micro-level transmission mechanisms of local government debt risk from the perspective of corporate information disclosure and provides policy insights for improving local debt risk governance and optimizing supply chain information disclosure systems.