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On the tax bias against investments in fixed assets: Empirical evidence from China

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  • Zhiyong An

Abstract

China's new Corporate Income Tax Law was passed in March 2007 and took effect on 1 January 2008. We take advantage of this tax law change and use a difference‐in‐differences approach to empirically estimate the impact of taxation on asset structure. Employing the Chinese Industrial Enterprises Database from 2002 to 2008 to implement the analysis, we find evidence suggesting the presence of tax bias against investments in fixed assets. We address two potential concerns about our analysis and argue that our conclusion is not China‐specific; it is a general lesson for modern finance theory that is portable to developed countries.

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  • Zhiyong An, 2019. "On the tax bias against investments in fixed assets: Empirical evidence from China," The World Economy, Wiley Blackwell, vol. 42(2), pages 419-428, February.
    • Handle: RePEc:bla:worlde:v:42:y:2019:i:2:p:419-428
    DOI: 10.1111/twec.12671
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    Cited by:

    1. Mario La Torre & Sabrina Leo & Ida Claudia Panetta, 2021. "Banks and environmental, social and governance drivers: Follow the market or the authorities?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1620-1634, November.
    2. Qi, Yu & Shao, Shuai & Tian, Zhihua & Xu, Yang & Yin, Jun, 2022. "Environmental consequences of fair competition: Evidence from China's corporate income tax merger policy," Ecological Economics, Elsevier, vol. 195(C).

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