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Tax reduction incentive and corporate financialization

Author

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  • Wang, Jingzheng
  • Qin, Xiaoli

Abstract

This paper investigates the influence of tax reduction incentives on firms' financialization based on the data from A-share listed companies spanning 2010 to 2022. The findings indicate that tax reduction incentives can effectively hinder firms' financialization. Furthermore, the mechanism test reveals that the reduction of financing constraints and the rise in fixed asset investments play a crucial intermediary role. Considering the diverse nature of company property rights and advanced technology, the analysis suggests that the impact of tax reduction incentives on the financialization of enterprises is more pronounced in private and conventional technology enterprises.

Suggested Citation

  • Wang, Jingzheng & Qin, Xiaoli, 2024. "Tax reduction incentive and corporate financialization," Finance Research Letters, Elsevier, vol. 62(PB).
    • Handle: RePEc:eee:finlet:v:62:y:2024:i:pb:s1544612324002381
    DOI: 10.1016/j.frl.2024.105208
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    References listed on IDEAS

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    1. Li, Yueshan & Mao, Jinzhou & Chen, Shoudong & Yang, Dongliang, 2022. "Tax-reducing incentive and corporate green performance: What we learn from China," Renewable Energy, Elsevier, vol. 199(C), pages 791-802.
    2. Jiang, Yiyun & Wang, Xiufeng & Sam, Toong Hai, 2024. "Credit markets, strict financial regulation, and the financialization of listed firms," Finance Research Letters, Elsevier, vol. 61(C).
    3. Guan, Yonghao & Wang, Xinyue & He, Yiqi, 2024. "Structural tax reduction and corporate labor investment efficiency," Finance Research Letters, Elsevier, vol. 62(PA).
    4. Jiang, Hongli & Hu, Wenjie & Jiang, Pengcheng, 2024. "Does ESG performance affect corporate tax avoidance? Evidence from China," Finance Research Letters, Elsevier, vol. 61(C).
    5. Yahya, Farzan & Lee, Chien-Chiang, 2023. "Disentangling the asymmetric effect of financialization on the green output gap," Energy Economics, Elsevier, vol. 125(C).
    6. Huang, Zhixiong & Lv, Lan & Yang, Ming, 2024. "Governance of tax incentives: An effectiveness and differential analysis based on the Chinese context," Finance Research Letters, Elsevier, vol. 60(C).
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    Cited by:

    1. Song, Simiao & Wang, Fan & Liu, Xia, 2024. "Impact of the regional financial reform on corporate financialization: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    2. Xie, Yan & Zhang, Juan & Zhang, Kun & Ren, Yixin, 2025. "How can wage restriction order affect a firms' financialization?," Finance Research Letters, Elsevier, vol. 72(C).
    3. Tang, Ye, 2025. "Private economy development, enterprises financialization, and total factor productivity of enterprises," International Review of Economics & Finance, Elsevier, vol. 97(C).
    4. Ding, Qiaoying & He, Wensheng & Deng, Yanfang, 2025. "Can tax reduction incentive policy promote corporate digital and intelligent transformation?," International Review of Financial Analysis, Elsevier, vol. 99(C).

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