Since the State-owned Assets Supervision and Administration Commission of the State Council promulgated the Guidelines for Compliance Management of Central State-owned Enterprises (for Trial Implementation) (hereinafter referred to as the Guidelines) in 2018, central SOEs have actively responded to the call to vigorously push forward the construction of compliance management systems, which plays an important role in enhancing the soft power of enterprise operation and management, preventing and resolving of major compliance risks, and laying a firm foundation for high-quality development.

Based on the institutional background of the phased implementation of compliance management in China’s central SOEs, this paper empirically examines whether compliance management can empower the high-quality development of central SOEs with a multi-time DID model. The study finds that the implementation of compliance management significantly increases the TFP of central SOEs, and the promulgation of compliance manuals and the establishment of compliance committees at the group level both contribute to the growth of TFP. Mechanism testing shows that compliance management improves management efficiency by curbing corporate and employee non-compliance and reducing excessive on-the-job consumption, promotes capital efficiency by reducing inefficient investment (especially over-investment), and promotes labor efficiency by optimizing the human capital structure and increasing the average compensation of employees, ultimately contributing to the growth of TFP. Further analysis shows that the positive impact of compliance management on TFP is even greater for enterprises with weaker internal controls,those in higher monopoly industries, and those with lower employee rights protection.

This paper affirms the significance of the construction of compliance management systems in central SOEs. It not only provides a useful exploration for the theoretical development of the integration of external government supervision and internal compliance management of enterprises with Chinese characteristics, but also enriches the theoretical research on the influencing factors of TFP based on the perspective of the rule of law reform, offering policy insights for establishing a sound mechanism of compliance management, cultivating new quality productive forces, and promoting the high-quality development of enterprises.