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Local donation culture and corporate tax avoidance: Evidence from China

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  • Chuanlu Ge
  • Yuhan Bi
  • Jia Xu

Abstract

Using a sample of Chinese A‐share listed firms over the period 2010–2017, this paper investigates the impact of local donation culture on corporate tax avoidance. We find that firms located in areas with a strong local donation culture are less engaged in tax avoidance. The results remain robust under a variety of robustness tests. Furthermore, we find that this relationship is driven by enhancing the moral identity of managers. In further analysis, we also explore the role of media attention, chief executive officer's (CEO's) childhood famine experience, and CEO duality in the relationship between local donation culture and corporate tax avoidance. This study enriches the existing literature on culture and firms' behaviors, and the conclusion of this paper has significant policy implications for governing corporate tax avoidance.

Suggested Citation

  • Chuanlu Ge & Yuhan Bi & Jia Xu, 2024. "Local donation culture and corporate tax avoidance: Evidence from China," Economics and Politics, Wiley Blackwell, vol. 36(2), pages 734-763, July.
    • Handle: RePEc:bla:ecopol:v:36:y:2024:i:2:p:734-763
    DOI: 10.1111/ecpo.12268
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