The ex post lifelong accountability for SOEs' executives is an important manifestation of the corporate governance system of SOEs with Chinese characteristics, and is an important innovation in the regulatory system to strengthen the supervision from investors. Based on the introduction of the accountability system for illegal operation or investment of SOEs in different provinces, this paper examines the effect of the investor accountability system on the excess cash holdings of SOEs. We find that the accountability system exerts an inhibitory effect on managerial incentives, and that SOEs experience a decrease in excess cash holdings after its implementation relative to non-SOEs. Channel test shows that the accountability system plays this role by restraining overinvestment, perks and other opportunistic behaviors. Cross-sectional tests suggest that the effect of the accountability system is especially pronounced in SEOs with poor corporate governance and high government control right. Further analysis shows that after the implementation of the accountability system, capital expenditures of SOEs have decreased, and more cash is allocated to innovation, donation and cash dividend payments, and the system improves the value of cash holdings. Our study has important lessons from experience for improving the supervision system of state-owned capital and constructing a modern corporate governance system for SOEs with Chinese characteristics.