This study investigates the impact of the 2002 Chinese Code of CorporateGovernance for Listed Companies on earnings manipulations. We find that, ingeneral, the 2002 CODE had a positive effect on curbing earnings managementthrough the introduction of independent non-executive directors to the board ofdirectors and the audit committee, and accounting/financial experts to the auditcommittee. Although such an impact was minimal when the firms were state-controlled, it became significant once they were privately controlled. Overall,we find regulatory reform on corporate governance plays an important role indeterring the use of earnings management.