IDEAS home Printed from https://ideas.repec.org/a/taf/rcjaxx/v6y2018i1p84-105.html
   My bibliography  Save this article

State ownership, performance evaluation and tax avoidance

Author

Listed:
  • Xinyuan Chen
  • Xu Lin
  • Wenhong Ding
  • Kai Zhu

Abstract

In 2004, the central and local State-owned Assets Supervision and Administration Commission (SASAC) announced how to evaluate the performance of management of state-owned enterprises (SOEs) that are under its control. This article examines how the different performance evaluation systems in different provinces influence the tax avoidance behaviour of SOEs. We find that only four of them – Shanghai, Guangdong, Zhejiang and Fujian – adopt after-tax profit as the evaluation index, while all the other provinces use before-tax profit. We believe that SOEs which use after-tax profit as an evaluation index have higher incentives to reduce the tax burden than those which use before-tax profit as an evaluation index. Following previous literature, two measurements of tax avoidance are used in this paper: effective tax rate and book-tax difference. Based on 8426 observations from 2007 to 2015, we have two main conclusions: (1) compared with SOEs that are evaluated using before-tax profit as the evaluation index, SOEs that are evaluated using after-tax profit have lower effective tax rate (ETR) and higher book-tax difference (BTD); (2) compared with SOEs that are evaluated using before-tax profit as the evaluation index, SOEs that are evaluated using after-tax profit have a higher level of substitution between debt financing and tax avoidance.

Suggested Citation

  • Xinyuan Chen & Xu Lin & Wenhong Ding & Kai Zhu, 2018. "State ownership, performance evaluation and tax avoidance," China Journal of Accounting Studies, Taylor & Francis Journals, vol. 6(1), pages 84-105, January.
    • Handle: RePEc:taf:rcjaxx:v:6:y:2018:i:1:p:84-105
    DOI: 10.1080/21697213.2018.1494109
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/21697213.2018.1494109
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/21697213.2018.1494109?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:rcjaxx:v:6:y:2018:i:1:p:84-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rcja .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.