IDEAS home Printed from https://ideas.repec.org/a/eee/ecanpo/v87y2025icp1612-1629.html
   My bibliography  Save this article

Does tax avoidance information disclosure promote capital market pricing efficiency? Evidence from a quasi-natural experiment in China

Author

Listed:
  • Wu, Zheng
  • Cheng, Moyi
  • Wang, Bing
  • Zhao, Yi

Abstract

We investigate how tax avoidance information disclosure shapes capital market pricing efficiency, using China's phased implementation of the country-by-country reporting (CbCR) regime as a quasi-natural experimental setting. Existing studies suggest that tax avoidance disclosure enhances transparency, but its impact on capital market efficiency remains underexplored. Using a staggered difference-in-differences (DID) approach, we find that tax avoidance disclosure significantly improves capital market pricing efficiency, especially in firms with standard unqualified audit opinions, higher R&D expenditures, more independent directors, and non-state-owned ownership. Mechanism analysis demonstrates that this effect arises from diminished tax evasion and improved information disclosure. The results indicate that the implementing of CbCR improves transparency, thereby mitigating information asymmetry and strengthening informational efficiency in capital markets. The study also offers policy insights for improving corporate transparency and tax regulation.

Suggested Citation

  • Wu, Zheng & Cheng, Moyi & Wang, Bing & Zhao, Yi, 2025. "Does tax avoidance information disclosure promote capital market pricing efficiency? Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 87(C), pages 1612-1629.
    • Handle: RePEc:eee:ecanpo:v:87:y:2025:i:c:p:1612-1629
    DOI: 10.1016/j.eap.2025.07.021
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0313592625002954
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.eap.2025.07.021?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

    for a different version of it.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • F68 - International Economics - - Economic Impacts of Globalization - - - Policy
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

    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:eee:ecanpo:v:87:y:2025:i:c:p:1612-1629. 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: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/economic-analysis-and-policy .

    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.