Abstract: The SEO regulatory policies are an important factor influencing the SEO decision-making of listed companies in China. The paper analyzes SEO regulatory policies with the gap model of game theory, and finds that the policies of addissuance will bring issuance of additional qualification line, while the regulatory policy limits theoretically produce the huge gap of expected income, and when the companies fail to qualify additional lines, they will have the motivation to manipulate performance. The paper argues that regulatory department can use ROE as assessment indicator to qualify listed companies, while considering additional assessment of financial indicators; at the same time audit supervision should be strengthened in order to ensure the high quality of information disclosure.