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Anti‐Corruption and Corporate Tax Burden: Evidence from China

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Listed:
  • Yunsen Chen
  • Dengjin Zheng
  • Peixin Li
  • Weimin Wang

Abstract

We examine whether the Chinese government's anti‐corruption enforcement reduces corporate tax burdens. Using a difference‐in‐difference approach, we find tax burdens of firms located in corrupt political leaders’ jurisdictions are lower after these leaders were deposed. An analysis of two tax policy changes shows that the reduction in tax burden is more pronounced when corrupt politicians had more power in levying taxes.

Suggested Citation

  • Yunsen Chen & Dengjin Zheng & Peixin Li & Weimin Wang, 2020. "Anti‐Corruption and Corporate Tax Burden: Evidence from China," International Review of Finance, International Review of Finance Ltd., vol. 20(3), pages 781-788, September.
    • Handle: RePEc:bla:irvfin:v:20:y:2020:i:3:p:781-788
    DOI: 10.1111/irfi.12226
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    References listed on IDEAS

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    5. Joseph D. Piotroski & T. J. Wong & Tianyu Zhang, 2015. "Political Incentives to Suppress Negative Information: Evidence from Chinese Listed Firms," Journal of Accounting Research, Wiley Blackwell, vol. 53(2), pages 405-459, May.
    6. Hanlon, Michelle & Heitzman, Shane, 2010. "A review of tax research," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 127-178, December.
    7. Fisman, Raymond & Svensson, Jakob, 2007. "Are corruption and taxation really harmful to growth? Firm level evidence," Journal of Development Economics, Elsevier, vol. 83(1), pages 63-75, May.
    8. Armstrong, Christopher S. & Blouin, Jennifer L. & Jagolinzer, Alan D. & Larcker, David F., 2015. "Corporate Governance, Incentives, and Tax Avoidance," Research Papers 2134, Stanford University, Graduate School of Business.
    9. Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(3), pages 681-712.
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    Cited by:

    1. Tom Moerenhout & Joonseok Yang, 2022. "Tax Evasion Attitudes of Small Firms in Low‐ and Middle‐income Countries: Evidence from Nigeria," Development Policy Review, Overseas Development Institute, vol. 40(6), November.
    2. Adamu Jibir & Musa Abdu & Tasiu Muhammad, 2020. "Analysis of Tax Compliance in Sub-Saharan Africa: Evidence from Firm-Level Study," Econometric Research in Finance, SGH Warsaw School of Economics, Collegium of Economic Analysis, vol. 5(2), pages 119-142, December.

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