COMPETITION AND CORPORATE TAX AVOIDANCE: EVIDENCE FROM CHINESE INDUSTRIAL FIRMS

• 成果类型: Article
• 署名作者: Cai, Hongbin; Liu, Qiao
• 署名单位: Peking University; Peking University; University of Hong Kong
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/j.1468-0297.2009.02217.x
• 发表日期: 2009
• 页码: 764-795
• 关键词: weak instruments; evasion; income

摘要

This article investigates whether market competition enhances the incentives of Chinese industrial firms to avoid corporate income tax. We estimate the effects of competition on the relationship between firms' reported accounting profits and their imputed profits based on the national income account. To cope with measurement errors and potential endogeneity, we use instrumental variables, exogenous policy shocks and other robustness analysis. We find robust and consistent evidence that firms in more competitive environments engage in more tax avoidance activities. Moreover, all else equal, firms in relatively disadvantageous positions demonstrate stronger incentives to avoid corporate income tax.