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Can digital tax enforcement reduce the risk of corporate debt default?

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  • Chen, Wanyi
  • Xu, Jingyu

Abstract

The development of technology has led to the widespread use of digital technology in tax enforcement. Using the Chinese digital tax enforcement reform as a quasi-natural experiment, this study shows that digital tax enforcement reduces the risk of debt default by improving accounting information quality and reducing agency costs. Further analysis shows that this impact is more significant in enterprises with poorer external information environments, lower internal control quality, lower customer concentration, and lower digitalization levels. This study enriches the research on the economic consequences of digital tax enforcement. This has practical implications for the government when using information technology to strengthen tax administration.

Suggested Citation

  • Chen, Wanyi & Xu, Jingyu, 2024. "Can digital tax enforcement reduce the risk of corporate debt default?," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 1041-1060.
    • Handle: RePEc:eee:ecanpo:v:83:y:2024:i:c:p:1041-1060
    DOI: 10.1016/j.eap.2024.08.010
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    Cited by:

    1. Song, Gaoya & Li, Quan, 2025. "Big data in tax enforcement and trade credit: Evidence from China," Research in International Business and Finance, Elsevier, vol. 76(C).

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