IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v102y2025ics1059056025004903.html

The impact of tax reduction and fee cuts policy on corporate new-form productivity: Evidence from Chinese A-share listed companies

Author

Listed:
  • Li, Junhu
  • Wang, Lin
  • Dong, Fang
  • Li, Qinghai

Abstract

This study utilizes data from Chinese A-share listed companies in the Shanghai and Shenzhen stock exchanges over the period of 2016–2022. A panel two-way fixed-effects model is employed to systematically investigate the impact of tax cuts and fee reductions on the new-quality productive forces of enterprises and the underlying mechanisms. The results indicate that tax cuts and fee reductions significantly enhance the new-quality productive forces of enterprises. This effect is heterogeneous across different types of enterprises, with private enterprises, enterprises in central cities, small-sized enterprises, high-tech industry enterprises, start-up enterprises, and enterprises in highly competitive industries benefiting more significantly. Additionally, the optimization of the local business environment and the strengthening of intellectual property rights protection can amplify the positive effects of tax cuts and fee reductions. Mechanism analysis reveals that tax cuts and fee reductions primarily influence the new-quality productive forces of enterprises through alleviating financing constraints, improving the efficiency of resource allocation, and promoting cooperation among industry, academia, and research institutions. The study's findings offer a new perspective for understanding the micro-level effects of tax cuts and fee reductions and provide empirical evidence for policymakers to optimize relevant policies.

Suggested Citation

  • Li, Junhu & Wang, Lin & Dong, Fang & Li, Qinghai, 2025. "The impact of tax reduction and fee cuts policy on corporate new-form productivity: Evidence from Chinese A-share listed companies," International Review of Economics & Finance, Elsevier, vol. 102(C).
    • Handle: RePEc:eee:reveco:v:102:y:2025:i:c:s1059056025004903
    DOI: 10.1016/j.iref.2025.104327
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056025004903
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2025.104327?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.

    References listed on IDEAS

    as
    1. Sun, Liming & Lu, Feixiang & Guan, Haoyuan & Lu, Xiang & Zhai, Jun & Liu, Junchao, 2025. "Tax incentives, business environment, and entrepreneurial and innovation outcome," International Review of Financial Analysis, Elsevier, vol. 103(C).
    2. João Leitão & Dina Pereira & Ângela Gonçalves, 2021. "Quality of Work Life and Contribution to Productivity: Assessing the Moderator Effects of Burnout Syndrome," IJERPH, MDPI, vol. 18(5), pages 1-20, March.
    3. Alberto Alesina & Ekaterina Zhuravskaya, 2011. "Segregation and the Quality of Government in a Cross Section of Countries," American Economic Review, American Economic Association, vol. 101(5), pages 1872-1911, August.
    4. Zhao, Zhiqi & Yue, Yong & Wang, Wangshuai, 2024. "Unintended consequences of tax incentives on firms' human capital composition: Evidence from China," China Economic Review, Elsevier, vol. 84(C).
    5. Antoine Dechezleprêtre & Elias Einiö & Ralf Martin & Kieu-Trang Nguyen & John Van Reenen, 2023. "Do Tax Incentives Increase Firm Innovation? An RD Design for R&D, Patents, and Spillovers," American Economic Journal: Economic Policy, American Economic Association, vol. 15(4), pages 486-521, November.
    6. Eichfelder, Sebastian & Jacob, Martin & Schneider, Kerstin, 2023. "Do tax incentives affect investment quality?," Journal of Corporate Finance, Elsevier, vol. 80(C).
    7. Feng, Qianbin & Ge, Ying & Zhao, Lexin, 2024. "Tax incentives and corporate digital transformation: Evidence from China’s accelerated depreciation policy," Journal of Asian Economics, Elsevier, vol. 95(C).
    8. Chen, Tuyue & Mu, Congming & Tang, Shengzhuo, 2025. "The effects of tax cuts and financing subsidies on environmentally and financially constrained firms," Economics Letters, Elsevier, vol. 247(C).
    9. Muhammad Arif Khan & Xuezhi Qin & Khalil Jebran & Abdul Rashid, 2020. "The Sensitivity of Firms’ Investment to Uncertainty and Cash Flow: Evidence From Listed State-Owned Enterprises and Non-State-Owned Enterprises in China," SAGE Open, , vol. 10(1), pages 21582440209, January.
    10. Jiang, Weijie & Li, Jiaye, 2024. "Digital transformation and its effect on resource allocation efficiency and productivity in Chinese corporations," Technology in Society, Elsevier, vol. 78(C).
    11. Jin Xu & Weixian Wei, 2021. "The effects of tax and fee reduction policy on mitigating shock of the COVID-19 epidemic in China," Applied Economics, Taylor & Francis Journals, vol. 53(46), pages 5303-5318, October.
    12. Chu, Haiying & Niu, Xiaoxiao & Li, Mou & Wei, Lei, 2025. "Research on the impact of new quality productivity on enterprise ESG performance," International Review of Economics & Finance, Elsevier, vol. 99(C).
    13. Firoz Ehsan, 2021. "Boosting innovation in small- and medium-sized enterprises through tax incentives: lessons from the UK," Science and Public Policy, Oxford University Press, vol. 48(5), pages 712-726.
    14. Li, Chengyou & Jiao, Yong & Sun, Tao & Liu, Anran, 2021. "Alleviating multi-dimensional poverty through land transfer: Evidence from poverty-stricken villages in China," China Economic Review, Elsevier, vol. 69(C).
    15. Li, Chengming & Wang, Yilin & Zhou, Zhihan & Wang, Zeyu & Mardani, Abbas, 2023. "Digital finance and enterprise financing constraints: Structural characteristics and mechanism identification," Journal of Business Research, Elsevier, vol. 165(C).
    16. Ting Lei & Ping Xie, 2024. "RETRACTED ARTICLE: Fostering Enterprise Innovation: The Impact of China’s Pilot Free Trade Zones," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(3), pages 10412-10441, September.
    17. Zhao Li & Bingyang Lv, 2021. "Total factor productivity of Chinese industrial firms: evidence from 2007 to 2017," Applied Economics, Taylor & Francis Journals, vol. 53(60), pages 6910-6926, December.
    18. Cui, Wei & Hicks, Jeffrey & Xing, Jing, 2022. "Cash on the table? Imperfect take-up of tax incentives and firm investment behavior," Journal of Public Economics, Elsevier, vol. 208(C).
    19. Wei Liu & Yoshihisa Suzuki, 2024. "Stock liquidity, financial constraints, and innovation in Chinese SMEs," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 10(1), pages 1-43, December.
    20. Zhao, Qiuhan & Wu, Wei & Ge, Yuanqin & Xu, Jing, 2025. "Can intellectual property protection policy enhance enterprise innovation capability? Quasi-natural experimental study," International Review of Financial Analysis, Elsevier, vol. 103(C).
    21. Yang, Wenke & Che, Zhen, 2025. "Shadow banking risk exposure and green new quality productivity forces resilience: Pathways to development for Chinese firms," International Review of Financial Analysis, Elsevier, vol. 102(C).
    22. Tang, Meili & Wang, Yu, 2022. "Tax incentives and corporate social responsibility: The role of cash savings from accelerated depreciation policy," Economic Modelling, Elsevier, vol. 116(C).
    23. Lily H. Fang & Josh Lerner & Chaopeng Wu, 2017. "Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China," The Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2446-2477.
    24. Li Lin & Tianyu Gu & Yi Shi, 2024. "The Influence of New Quality Productive Forces on High-Quality Agricultural Development in China: Mechanisms and Empirical Testing," Agriculture, MDPI, vol. 14(7), pages 1-19, June.
    25. Xue, Gang & Cai, Yanxi & Zhang, Yan, 2025. "The influence of income tax incentives on small and low-profit enterprises’ production factor investment," Economic Systems, Elsevier, vol. 49(1).
    26. Li, Chengyou & Li, Yuxin & Xu, Yun & Sun, Guanglin, 2025. "Research on the impact of financial technology on risk-taking of commercial banks," Research in International Business and Finance, Elsevier, vol. 76(C).
    27. Munongo, Simon & Akanbi, Olusegun Ayo & Robinson, Zurika, 2017. "Do tax incentives matter for investment? A literature review," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 13(2).
    28. Mengchao Zhao & Xiang Xiao & Jiaan Yang & Haonan Chen, 2024. "Do regional tax incentive policies improve productivity?," PLOS ONE, Public Library of Science, vol. 19(8), pages 1-30, August.
    29. Chin, Tachia & Li, Zhisheng & Huang, Leping & Li, Xinyu, 2025. "How artificial intelligence promotes new quality productive forces of firms: A dynamic capability view," Technological Forecasting and Social Change, Elsevier, vol. 216(C).
    30. Armanious, Amir & Zhao, Ruoyun, 2024. "Stock liquidity effect on leverage: The role of debt security, financial constraint, and risk around the global financial crisis and Covid-19 pandemic," International Review of Financial Analysis, Elsevier, vol. 92(C).
    31. Song, Yan & Xiu, Yifan & Zhao, Mengyang & Tian, Ye & Wang, Jingyuan, 2024. "Intellectual property protection and enterprise innovation: Evidence from China," Finance Research Letters, Elsevier, vol. 62(PB).
    32. Andrew Hanson, 2021. "Taxes and Economic Development: An Update on the State of the Economics Literature," Economic Development Quarterly, , vol. 35(3), pages 232-253, August.
    33. 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).
    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. Xue, Gang & Cai, Yanxi & Zhang, Yan, 2025. "The influence of income tax incentives on small and low-profit enterprises’ production factor investment," Economic Systems, Elsevier, vol. 49(1).
    2. Deng, Huiyuan & Ding, Bibo, 2025. "The impact of the construction policy for intellectual property demonstration cities on Chinese institutional investor shareholding," Finance Research Letters, Elsevier, vol. 86(PD).
    3. Sun, Zhiyao & Che, Shuai & Wang, Jie, 2024. "Deconstruct artificial intelligence's productivity impact: A new technological insight," Technology in Society, Elsevier, vol. 79(C).
    4. Hu, Guoliu & Li, Xiaoqian & Cao, Zhangfan, 2025. "Do tax incentives make firms greener? Evidence from the accelerated depreciation policy in China," The British Accounting Review, Elsevier, vol. 57(5).
    5. Zhao, Qiuhan & Wu, Wei & Ge, Yuanqin & Xu, Jing, 2025. "Can intellectual property protection policy enhance enterprise innovation capability? Quasi-natural experimental study," International Review of Financial Analysis, Elsevier, vol. 103(C).
    6. Xiaofeng Zhang & Xuefu Sun & Yu Fu, 2025. "How Does the National Intellectual Property Strong County Program Improve County-Level Air Quality? Evidence from Chinese Counties," Sustainability, MDPI, vol. 17(20), pages 1-25, October.
    7. Wenshuai Wang & Fanchen Meng & Shang Gao, 2025. "The Interaction Effects of Income Tax Incentives and Environmental Tax Levies on Corporate ESG Performance: Evidence from China," Sustainability, MDPI, vol. 17(12), pages 1-23, June.
    8. Bai, Yun & Jia, Xu & Wang, Xiaojie, 2025. "Allocation effects of new infrastructure special bonds: a capital factor market integration perspective," Finance Research Letters, Elsevier, vol. 86(PF).
    9. Yang, Manze & Liao, Yun & Li, Mingyue, 2026. "Does supply chain finance development alleviate cash flow volatility in entrepreneurially oriented firms?," Finance Research Letters, Elsevier, vol. 88(C).
    10. Xiao, Renrui & Xu, Pingguo & Huang, Baocong, 2024. "Tax incentives and firm social insurance contributions: Evidence from China," China Economic Review, Elsevier, vol. 86(C).
    11. Zhang, Hanbin & Chen, Yi, 2025. "The role of new quality productivity in driving China's green economic growth," International Review of Economics & Finance, Elsevier, vol. 102(C).
    12. Xiaoyong Dai & Peichao Guo, 2026. "Policy failure in public support for small business innovation: the case of innovation vouchers in China," Small Business Economics, Springer, vol. 66(1), pages 393-421, January.
    13. Liu, Fang & Zhang, Zhaomei & Zhang, Junjie & Guo, Fenghang, 2025. "Nationalism and corporate innovation performance," International Review of Economics & Finance, Elsevier, vol. 102(C).
    14. Li, Haiyan & Yin, Peiyan, 2024. "Does tax refund policy boost executive compensation?," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 898-911.
    15. Yang, Haodong & Zhang, Yumei & Wang, Gaofeng & Liu, Li, 2025. "Intellectual property governance and academic technology transfer," Technovation, Elsevier, vol. 148(C).
    16. Wang Hao & Liu Chengkui & Yu Yue & Lin Xiaodan, 2025. "Rule of Law Enhancement, Innovation Incentives, and Business Performance: Evidence from China’s IPCs," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(2), pages 7350-7382, June.
    17. Chen, Shaojian, 2026. "Digitalization and cross-regional investments: Evidence from parent-subsidiaries in China," International Review of Financial Analysis, Elsevier, vol. 109(C).
    18. Huiquan Li & Qingning Lin & Yan Wang & Shiping Mao, 2023. "Can Digital Finance Improve China’s Agricultural Green Total Factor Productivity?," Agriculture, MDPI, vol. 13(7), pages 1-19, July.
    19. Ding, Xiangan & Appolloni, Andrea & Shahzad, Mohsin & Liu, Yue & Han, Shaojie, 2025. "Digital transformation and total factor productivity in manufacturing firms: Evidence of corporate public responsibilities in China," Technology in Society, Elsevier, vol. 82(C).
    20. Silvia Appelt & Matej Bajgar & Chiara Criscuolo & Fernando Galindo-Rueda, 2025. "How effective are R&D tax incentives? Reconciling micro and macro evidence," CEP Discussion Papers dp2071, Centre for Economic Performance, LSE.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:reveco:v:102:y:2025:i:c:s1059056025004903. 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/620165 .

    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.