The Unintended Consequence of Land Finance: Evidence from Corporate Tax Avoidance

• 成果类型: Article
• 署名作者: Chen, Tao; Tan, Youchao; Wang, Jinghua; Zeng, Cheng (Colin)
• 署名单位: Nanyang Technological University; Jinan University; Nanjing Audit University; Nanjing Audit University; Hong Kong Polytechnic University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2021.4191
• 发表日期: 2022
• 页码: 8319-8342
• 关键词: land finance; Tax avoidance; Political incentives; Tax enforcement

摘要

Using a large sample of unlisted industrial firms in China, we find that a decrease in local governments' land transfer revenues leads to lower tax avoidance by firms within their jurisdiction. Our cross-sectional variation tests suggest that the tax-avoidance-reduction effect is stronger in cities with higher land finance dependence and government intervention, as well as where the political leaders have stronger promotion incentives. However, the effect is moderated for politically connected firms. Further analysis reveals that intensified tax enforcement is the mechanism through which land transfer revenue losses result in decreased tax avoidance. Our study offers novel evidence on a previously underexplored determinant of corporate tax avoidance through the lens of land finance.