IDEAS home Printed from https://ideas.repec.org/a/eee/finana/v97y2025ics1057521924006975.html
   My bibliography  Save this article

Fintech development, corporate tax avoidance and firm value

Author

Listed:
  • Tang, Mengxuan
  • Hu, Yang
  • Hou, Yang (Greg)
  • Oxley, Les
  • Goodell, John W.

Abstract

We examine the relationship between fintech development and tax avoidance, as well as investigate whether this relationship has an impact on firm value. Using the data from Chinese A-listed firms, we provide evidence that fintech development increases tax avoidance, which facilitates firm value. Moreover, we find that fintech raises after-tax income and future cash flow by facilitating firms to avoid tax. Fintech development is negatively associated with tax risk and positively related to the effectiveness of firms in capitalizing on tax preferences. We further determine that the positive effects of fintech are more pronounced among firms with low internal information quality, weak internal control, and more geographically dispersed operations. Digital transformation, cash flow uncertainty, and regional economic development are the important potential channels through which fintech development influences tax avoidance. Our results are robust to alternative measures and endogeneity issues.

Suggested Citation

  • Tang, Mengxuan & Hu, Yang & Hou, Yang (Greg) & Oxley, Les & Goodell, John W., 2025. "Fintech development, corporate tax avoidance and firm value," International Review of Financial Analysis, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:finana:v:97:y:2025:i:c:s1057521924006975
    DOI: 10.1016/j.irfa.2024.103765
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1057521924006975
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.irfa.2024.103765?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 search for a different version of it.

    References listed on IDEAS

    as
    1. Chen, Shuping & Chen, Xia & Cheng, Qiang & Shevlin, Terry, 2010. "Are family firms more tax aggressive than non-family firms?," Journal of Financial Economics, Elsevier, vol. 95(1), pages 41-61, January.
    2. Huang, Henry He & Lobo, Gerald J. & Wang, Chong & Xie, Hong, 2016. "Customer concentration and corporate tax avoidance," Journal of Banking & Finance, Elsevier, vol. 72(C), pages 184-200.
    3. Andrew M. Bauer, 2016. "Tax Avoidance and the Implications of Weak Internal Controls," Contemporary Accounting Research, John Wiley & Sons, vol. 33(2), pages 449-486, June.
    4. Armstrong, Christopher S. & Blouin, Jennifer L. & Larcker, David F., 2012. "The incentives for tax planning," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 391-411.
    5. Ding, Na & Gu, Leilei & Peng, Yuchao, 2022. "Fintech, financial constraints and innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 73(C).
    6. Andreas Fuster & Matthew Plosser & Philipp Schnabl & James Vickery, 2019. "The Role of Technology in Mortgage Lending," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1854-1899.
    7. Nicola Cetorelli & Philip E. Strahan, 2006. "Finance as a Barrier to Entry: Bank Competition and Industry Structure in Local U.S. Markets," Journal of Finance, American Finance Association, vol. 61(1), pages 437-461, February.
    8. Thomas Philippon, 2016. "The FinTech Opportunity," NBER Working Papers 22476, National Bureau of Economic Research, Inc.
    9. Yiping Huang & Ms. Longmei Zhang & Zhenhua Li & Han Qiu & Tao Sun & Xue Wang, 2020. "Fintech Credit Risk Assessment for SMEs: Evidence from China," IMF Working Papers 2020/193, International Monetary Fund.
    10. Banna, Hasanul & Kabir Hassan, M. & Rashid, Mamunur, 2021. "Fintech-based financial inclusion and bank risk-taking: Evidence from OIC countries," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 75(C).
    11. Abdul Wahab, Nor Shaipah & Holland, Kevin, 2012. "Tax planning, corporate governance and equity value," The British Accounting Review, Elsevier, vol. 44(2), pages 111-124.
    12. Zhigang Qin & Wen Liu & Maonan Chen, 2022. "Corporate Tax Avoidance and Firm Diversification: Evidence from Chinese Listed Firms," Asian Economic Journal, East Asian Economic Association, vol. 36(1), pages 3-21, March.
    13. Phan, Dinh Hoang Bach & Narayan, Paresh Kumar & Rahman, R. Eki & Hutabarat, Akhis R., 2020. "Do financial technology firms influence bank performance?," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    14. Xudong Chen & Na Hu & Xue Wang & Xiaofei Tang, 2014. "Tax avoidance and firm value: evidence from China," Nankai Business Review International, Emerald Group Publishing Limited, vol. 5(1), pages 25-42, February.
    15. Tang, Mengxuan & Hou, Yang (Greg) & Goodell, John W. & Hu, Yang, 2024. "Fintech and corporate risk-taking: Evidence from China," Finance Research Letters, Elsevier, vol. 64(C).
    16. Bushman, Robert & Chen, Qi & Engel, Ellen & Smith, Abbie, 2004. "Financial accounting information, organizational complexity and corporate governance systems," Journal of Accounting and Economics, Elsevier, vol. 37(2), pages 167-201, June.
    17. Cantrell, Brett W. & Yust, Christopher G., 2018. "The relation between religiosity and private bank outcomes," Journal of Banking & Finance, Elsevier, vol. 91(C), pages 86-105.
    18. Nambisan, Satish & Wright, Mike & Feldman, Maryann, 2019. "The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    19. Mihir A Desai & Dhammika Dharmapala, 2009. "Corporate Tax Avoidance and Firm Value," The Review of Economics and Statistics, MIT Press, vol. 91(3), pages 537-546, August.
    20. Hasan, Iftekhar & Hoi, Chun Keung (Stan) & Wu, Qiang & Zhang, Hao, 2014. "Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans," Journal of Financial Economics, Elsevier, vol. 113(1), pages 109-130.
    21. Armstrong, Christopher S. & Blouin, Jennifer L. & Jagolinzer, Alan D. & Larcker, David F., 2015. "Corporate governance, incentives, and tax avoidance," Journal of Accounting and Economics, Elsevier, vol. 60(1), pages 1-17.
    22. Hasan, Mostafa Monzur & Lobo, Gerald J. & Qiu, Buhui, 2021. "Organizational capital, corporate tax avoidance, and firm value," Journal of Corporate Finance, Elsevier, vol. 70(C).
    23. Baghdadi, Ghasan & Podolski, Edward J. & Veeraraghavan, Madhu, 2022. "CEO risk-seeking and corporate tax avoidance: Evidence from pilot CEOs," Journal of Corporate Finance, Elsevier, vol. 76(C).
    24. Bankman, Joseph, 2004. "The Tax Shelter Problem," National Tax Journal, National Tax Association;National Tax Journal, vol. 57(4), pages 925-936, December.
    25. Shahriar, Abu Zafar M. & Unda, Luisa A. & Alam, Quamrul, 2020. "Gender differences in the repayment of microcredit: The mediating role of trustworthiness," Journal of Banking & Finance, Elsevier, vol. 110(C).
    26. Dang, Dandan & Fang, Hongsheng & He, Minyuan, 2019. "Economic policy uncertainty, tax quotas and corporate tax burden: Evidence from China," China Economic Review, Elsevier, vol. 56(C), pages 1-1.
    27. Chen, Hanwen & Liu, Siyi & Wang, Junjie & Wu, Zhijuan, 2022. "The effect of geographic proximity on corporate tax avoidance: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 72(C).
    28. Cheng, Weixuan & Li, Cheng & Zhao, Tianjiao, 2024. "The stages of enterprise digital transformation and its impact on internal control: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 92(C).
    29. Guo, Yingwen & Li, Jingjing & Lin, Bingxuan, 2023. "Corporate site visit and tax avoidance: The effects of monitoring and tax knowledge dissemination," Journal of Corporate Finance, Elsevier, vol. 79(C).
    30. Hasan, Iftekhar & Hoi, Chun Keung (Stan) & Wu, Qiang & Zhang, Hao, 2014. "Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans," Journal of Financial Economics, Elsevier, vol. 113(1), pages 109-130.
    31. Shen, Huayu & Hou, Fei & Peng, Miaowei & Xiong, Hao & Zuo, Haohao, 2021. "Economic policy uncertainty and corporate tax avoidance: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 65(C).
    32. Kelvin K. F. Law & Lillian F. Mills, 2015. "Taxes and Financial Constraints: Evidence from Linguistic Cues," Journal of Accounting Research, Wiley Blackwell, vol. 53(4), pages 777-819, September.
    33. Zhu, Jun & Ho, Kung-Cheng & Luo, Sijia & Peng, Langchuan, 2023. "Pandemic and tax avoidance: Cross-country evidence," Economic Modelling, Elsevier, vol. 124(C).
    34. Ding, Jinxiu & Li, Lingxue & Zhao, Jinsong, 2024. "How does fintech prompt corporations toward ESG sustainable development? Evidence from China," Energy Economics, Elsevier, vol. 131(C).
    35. Hanlon, Michelle & Slemrod, Joel, 2009. "What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement," Journal of Public Economics, Elsevier, vol. 93(1-2), pages 126-141, February.
    36. Luo, Sumei & Sun, Yongkun & Yang, Fan & Zhou, Guangyou, 2022. "Does fintech innovation promote enterprise transformation? Evidence from China," Technology in Society, Elsevier, vol. 68(C).
    37. He, Chengying & Geng, Xiaoxu & Tan, Chunzhi & Guo, Ruijin, 2023. "Fintech and corporate debt default risk: Influencing mechanisms and heterogeneity," Journal of Business Research, Elsevier, vol. 164(C).
    38. Gallemore, John & Labro, Eva, 2015. "The importance of the internal information environment for tax avoidance," Journal of Accounting and Economics, Elsevier, vol. 60(1), pages 149-167.
    39. Zhou, Shuya & Zhou, Peiyan & Ji, Hannah, 2022. "Can digital transformation alleviate corporate tax stickiness: The mediation effect of tax avoidance," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    40. Lv, Panpan & Xiong, Hu, 2022. "Can FinTech improve corporate investment efficiency? Evidence from China," Research in International Business and Finance, Elsevier, vol. 60(C).
    41. Li, Huanli & Wu, Yun & Cao, Dongmei & Wang, Yichuan, 2021. "Organizational mindfulness towards digital transformation as a prerequisite of information processing capability to achieve market agility," Journal of Business Research, Elsevier, vol. 122(C), pages 700-712.
    42. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    43. repec:zbw:bofrdp:2014_003 is not listed on IDEAS
    44. Gul, Ferdinand A. & Khedmati, Mehdi & Shams, Syed M.M., 2020. "Managerial acquisitiveness and corporate tax avoidance," Pacific-Basin Finance Journal, Elsevier, vol. 64(C).
    45. Guo, Bingnan & Feng, Yu & Lin, Ji, 2023. "Digital inclusive finance and digital transformation of enterprises," Finance Research Letters, Elsevier, vol. 57(C).
    46. Mills, LF, 1998. "Book-tax differences and internal revenue service adjustments," Journal of Accounting Research, Wiley Blackwell, vol. 36(2), pages 343-356.
    47. Tang, Mengxuan & Hu, Yang & Corbet, Shaen & Hou, Yang (Greg) & Oxley, Les, 2024. "Fintech, bank diversification and liquidity: Evidence from China," Research in International Business and Finance, Elsevier, vol. 67(PA).
    48. Toni M. Whited & Guojun Wu, 2006. "Financial Constraints Risk," The Review of Financial Studies, Society for Financial Studies, vol. 19(2), pages 531-559.
    49. Deng, Lu & Li, Sifei & Liao, Mingqing & Wu, Weixing, 2013. "Dividends, investment and cash flow uncertainty: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 27(C), pages 112-124.
    50. Minnick, Kristina & Noga, Tracy, 2010. "Do corporate governance characteristics influence tax management?," Journal of Corporate Finance, Elsevier, vol. 16(5), pages 703-718, December.
    51. Cheng, Maoyong & Qu, Yang, 2020. "Does bank FinTech reduce credit risk? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 63(C).
    52. Desai, Mihir A. & Dharmapala, Dhammika, 2006. "Corporate tax avoidance and high-powered incentives," Journal of Financial Economics, Elsevier, vol. 79(1), pages 145-179, January.
    53. Guo, Junyan & Fang, Hanqing & Liu, Xuexin & Wang, Cizhi & Wang, Yuan, 2023. "FinTech and financing constraints of enterprises: Evidence from China," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 82(C).
    54. Wu, Fei & Hu, Yan & Shen, Me, 2024. "The color of FinTech: FinTech and corporate green transformation in China," International Review of Financial Analysis, Elsevier, vol. 94(C).
    55. Nie, Zi & Ling, Xuan & Chen, Meian, 2023. "The power of technology: FinTech and corporate debt default risk in China," Pacific-Basin Finance Journal, Elsevier, vol. 78(C).
    56. Wen, Huiyu & Fang, Jincheng & Gao, Haoyu, 2023. "How FinTech improves financial reporting quality? Evidence from earnings management," Economic Modelling, Elsevier, vol. 126(C).
    57. Lai, Xiaobing & Yue, Shujing & Guo, Chong & Zhang, Xinhe, 2023. "Does FinTech reduce corporate excess leverage? Evidence from China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 281-299.
    58. Lu, Yu & Cao, Yue, 2018. "The individual characteristics of board members and internal control weakness: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 51(C), pages 75-94.
    59. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    60. Bradshaw, Mark & Liao, Guanmin & Ma, Mark (Shuai), 2019. "Agency costs and tax planning when the government is a major Shareholder," Journal of Accounting and Economics, Elsevier, vol. 67(2), pages 255-277.
    61. Haque, Tariq & Pham, Thu Phuong & Yang, Jiaxin, 2023. "Geopolitical risk, financial constraints, and tax avoidance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 88(C).
    62. Fang, Yi & Wang, Qi & Wang, Fan & Zhao, Yang, 2023. "Bank fintech, liquidity creation, and risk-taking: Evidence from China," Economic Modelling, Elsevier, vol. 127(C).
    63. Li, Jie & Wu, Yu & Xiao, Jing Jian, 2020. "The impact of digital finance on household consumption: Evidence from China," Economic Modelling, Elsevier, vol. 86(C), pages 317-326.
    64. Xudong Chen & Na Hu & Xue Wang & Xiaofei Tang, 2014. "Tax avoidance and firm value: evidence from China," Nankai Business Review International, Emerald Group Publishing Limited, vol. 5(1), pages 25-42, February.
    65. Bollaert, Helen & Lopez-de-Silanes, Florencio & Schwienbacher, Armin, 2021. "Fintech and access to finance," Journal of Corporate Finance, Elsevier, vol. 68(C).
    66. Li, Jianjun & Wu, Zhouyi & Feng, Lingbing, 2024. "How does environmental regulation affect corporate tax burdens? Evidence from China's environmental courts," Economic Modelling, Elsevier, vol. 130(C).
    67. Wen, Wen & Cui, Huijie & Ke, Yun, 2020. "Directors with foreign experience and corporate tax avoidance," Journal of Corporate Finance, Elsevier, vol. 62(C).
    68. Long Jin & Changchun Pan & Yan Li & Xinmiao Liu, 2022. "How Can FinTech Reduce Corporate Zombification Risk?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(15), pages 4350-4360, December.
    69. Yang, Tong & Zhang, Xun, 2022. "FinTech adoption and financial inclusion: Evidence from household consumption in China," Journal of Banking & Finance, Elsevier, vol. 145(C).
    70. 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.
    71. Z. Chen & O.-K. Hope & Q. Li & Y. Li, 2024. "Offshore activities and corporate tax avoidance," Post-Print hal-04535146, HAL.
    72. Yanru Li & Guanglin Sun & Qiang Gao & Changming Cheng, 2023. "Digital Financial Inclusion, Financial Efficiency and Green Innovation," Sustainability, MDPI, vol. 15(3), pages 1-13, January.
    73. Cai, Yulong & Huang, Zhuo & Zhang, Xun, 2024. "FinTech adoption and rural economic development: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 83(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kovermann, Jost & Velte, Patrick, 2019. "The impact of corporate governance on corporate tax avoidance—A literature review," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    2. Guo, Xingfang & Wei, Tao & Wang, Aiping & Hu, Haifeng, 2024. "Corporate governance effects of digital finance: Evidence from corporate tax avoidance in China," Research in International Business and Finance, Elsevier, vol. 72(PA).
    3. Chaudhry, Neeru, 2021. "Tax aggressiveness and idiosyncratic volatility," The North American Journal of Economics and Finance, Elsevier, vol. 58(C).
    4. Devos, Erik & Rahman, Shofiqur, 2023. "Does labor unemployment insurance affect corporate tax aggressiveness?," International Review of Financial Analysis, Elsevier, vol. 90(C).
    5. Fangjun Wang & Shuolei Xu & Junqin Sun & Charles P. Cullinan, 2020. "Corporate Tax Avoidance: A Literature Review And Research Agenda," Journal of Economic Surveys, Wiley Blackwell, vol. 34(4), pages 793-811, September.
    6. Wen, Wen & Cui, Huijie & Ke, Yun, 2020. "Directors with foreign experience and corporate tax avoidance," Journal of Corporate Finance, Elsevier, vol. 62(C).
    7. Hasan, Mostafa Monzur & Lobo, Gerald J. & Qiu, Buhui, 2021. "Organizational capital, corporate tax avoidance, and firm value," Journal of Corporate Finance, Elsevier, vol. 70(C).
    8. Shen, Huayu & Hou, Fei & Peng, Miaowei & Xiong, Hao & Zuo, Haohao, 2021. "Economic policy uncertainty and corporate tax avoidance: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 65(C).
    9. Alharbi, Samar & Atawnah, Nader & Al Mamun, Md & Ali, Muhammad Jahangir, 2022. "Local culture and tax avoidance: Evidence from gambling preference behavior," Global Finance Journal, Elsevier, vol. 52(C).
    10. Mahmud Hossain & Gerald J. Lobo & Santanu Mitra, 2023. "Firm-level political risk and corporate tax avoidance," Review of Quantitative Finance and Accounting, Springer, vol. 60(1), pages 295-327, January.
    11. Guo, Yingwen & Li, Jingjing & Lin, Bingxuan, 2023. "Corporate site visit and tax avoidance: The effects of monitoring and tax knowledge dissemination," Journal of Corporate Finance, Elsevier, vol. 79(C).
    12. Shen, Yuxin & Xu, Hanwen & Yu, Shuangli & Xu, Wei & Shen, Yongjian, 2022. "Air pollution and tax avoidance: New evidence from China," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 402-420.
    13. Wei Cen & Naqiong Tong & Yushi Sun, 2017. "Tax avoidance and cost of debt: evidence from a natural experiment in China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(5), pages 1517-1556, December.
    14. Bilicka, Katarzyna & Clancey-Shang, Danjue & Qi, Yaxuan, 2022. "Tax avoidance regulations and stock market responses," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    15. Akmalia M. Ariff & Khairul Anuar Kamarudin, 2019. "Institutional Quality, Tax Avoidance, and Analysts' Forecast: International Evidence," Capital Markets Review, Malaysian Finance Association, vol. 27(2), pages 15-35.
    16. Kim, Tae-Nyun & Lee, Pil-Seng, 2023. "Product market threats and tax avoidance," International Review of Financial Analysis, Elsevier, vol. 86(C).
    17. Mansoor Afzali & Timmy Thor, 2025. "Corporate culture and tax planning," Review of Quantitative Finance and Accounting, Springer, vol. 64(2), pages 861-898, February.
    18. Mostafa Monzur Hasan & Ahsan Habib & Nurul Alam, 2021. "Asset Redeployability and Corporate Tax Avoidance," Abacus, Accounting Foundation, University of Sydney, vol. 57(2), pages 183-219, June.
    19. Onur Bayar & Fariz Huseynov & Sabuhi Sardarli, 2018. "Corporate Governance, Tax Avoidance, and Financial Constraints," Financial Management, Financial Management Association International, vol. 47(3), pages 651-677, September.
    20. Wei Huang & Tingting Ying & Yun Shen, 2018. "Executive cash compensation and tax aggressiveness of Chinese firms," Review of Quantitative Finance and Accounting, Springer, vol. 51(4), pages 1151-1180, November.

    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:finana:v:97:y:2025:i:c:s1057521924006975. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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.elsevier.com/locate/inca/620166 .

    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.