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Mixed-ownership structure, non-state-blockholder coalition, and tax avoidance

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  • Long, Wenbin
  • Wu, Huiying
  • Li, Lidan
  • Ying, Sammy Xiaoyan
  • Li, Sihai

Abstract

This study examines the relationship between a coalition of non-state blockholders and corporate tax avoidance in a context in which state and non-state ownership coexist and the ownership structure is concentrated. Our results show that the dominance of non-state blockholders is positively associated with corporate tax avoidance and that the relationship is weakened by the state being the ultimate controller. Further analyses show that the relationship between non-state blockholder dominance and tax avoidance is weakened by the increased number of and greater heterogeneity among non-state blockholders. Moreover, the moderating effect of the state as the ultimate controller is more pronounced when there are fewer layers in the pyramidal state-shareholding structure and when the local government is the ultimate controller. In addition, we find that a tightening of regional tax enforcement efforts and the implementation of a 2007 tax reform weaken this relationship. Altogether, our results suggest that the collective power of non-state blockholder coalitions and the control strength of the state ultimate controller interact to influence corporate tax strategies.

Suggested Citation

  • Long, Wenbin & Wu, Huiying & Li, Lidan & Ying, Sammy Xiaoyan & Li, Sihai, 2024. "Mixed-ownership structure, non-state-blockholder coalition, and tax avoidance," International Review of Financial Analysis, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:finana:v:91:y:2024:i:c:s1057521923005045
    DOI: 10.1016/j.irfa.2023.102988
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    More about this item

    Keywords

    Tax avoidance; Ownership structure; Blockholder coalition; Ultimate controller;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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