Competition and Corporate Tax Avoidance

Evidence from Chinese Industrial Firms

Dados Bibliográficos

ID9710671
AutoresHongbin Cai (Peking University), Qiao Liu (0000-0003-0007-7190, University of Hong Kong)
Ano2009
Volume119
Fascículo537
Páginas764-795
Data de publicação2009-04-01
Peer ReviewedSim
Open AccessSim
TipoARTICLE
PeriódicoThe Economic Journal (JOURNAL)
Identificadores do periódicoISSN: 0013-0133 • E-ISSN: 1468-0297
EditoraOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2009.02217.x
OpenAlexW1990966575
IdiomaEN
Citações recebidas98
Referências citadas22

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. Copyright © The Author(s). Journal compilation © Royal Economic Society 2009

Beijing · Business · China · Competition (biology · Corporate Tax · Economic history · Economics · Management · Political science · Tax avoidance · Tax reform · Accounting · Corporate Finance and Governance · Corporate Taxation and Avoidance · Law · Taxation and Compliance Studies