Listed companies in China commonly exhibit insufficient or delayed recognition of goodwill impairments (GI). While the China Securities Regulatory Commission (CSRC) plays a vital role in protecting investor rights and maintaining market stability, its regulatory effectiveness is constrained by limited resources and selective law enforcement. In 2015, the CSRC introduced “the List of Random Inspection Matters by the China Securities Regulatory Commission” (random inspection system, RIS) to strengthen regulatory oversight of corporate operations and information disclosure through a combination of random inspections and on-site checks. Whether the RIS can improve the quality of GI information remains a pivotal empirical question demanding immediate investigation.

Using a sample of non-financial A-share listed companies from 2008 to 2022, this paper examines the effect of the CSRC’s RIS on GI. The results show that after the implementation of the RIS, inspected companies generally increases their GI provisions. Mechanism testing indicates that this effect is achieved through three mechanisms: supervisory governance, risk revelation, and regulatory spillover. Specifically, the RIS increases the probability of companies facing administrative penalties related to goodwill, bolsters the quality of internal control and the likelihood of shareholders’ proposals on goodwill-related issues, and intensifies auditors’ scrutiny of and executives’ prudence in GI. Heterogeneity analysis shows that the effect is more pronounced when inspectors possess greater professional experience, listed companies maintain closer relationships with local CSRC branches, and the system implementation is more effective. Further analysis indicates that the RIS exerts a stronger disciplinary effect on companies with higher GI risks or materiality levels. Economic consequence analysis demonstrates that timely GI recognition significantly reduces stock crash risks.

This paper has the following contributions: First, it furnishes theoretical explanations and empirical evidence on the positive role of the RIS in improving the quality of GI accounting information, enriching the research on GI accounting. Second, it verifies the effectiveness of the CSRC’s regulatory mechanism and offers empirical evidence on how securities regulation affects corporate earnings management, expanding the research on the economic consequences of the RIS. Third, it holds practical significance by providing insights for regulators to optimize supervisory models and refine accounting standards related to GI.