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Big data in tax enforcement and corporate risk-taking: Evidence from China

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  • Song, Gaoya
  • Wang, Yu

Abstract

This study uses the “Golden Tax Project III” as a quasi-natural experiment and employs a difference-in-differences (DID) model to examine how big data in tax enforcement (BDTE) affects corporate risk-taking. Based on data from China's A-share non-financial companies between 2008 and 2022, we find that BDTE enhances corporate risk-taking. Mechanism analyses indicate that BDTE exerts both a “bridge effect” and a “governance effect,” which enhance corporate information transparency, curb earnings management, and lower agency costs, thereby fostering greater risk-taking. Further analysis reveals that the two mechanisms operate in a complementary manner, jointly reinforcing the impact of BDTE on corporate risk-taking. Heterogeneity tests indicate that the impact of BDTE on enhancing risk-taking is more pronounced in non-state-owned enterprises than in state-owned ones. Moreover, market competition, the legal environment, and institutional holdings tend to moderate the influence of BDTE on corporate risk-taking. Our findings establish a link between BDTE and corporate risk-taking, offering valuable insights for both companies and policymakers in shaping investment strategies.

Suggested Citation

  • Song, Gaoya & Wang, Yu, 2025. "Big data in tax enforcement and corporate risk-taking: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 104(C).
    • Handle: RePEc:eee:reveco:v:104:y:2025:i:c:s1059056025008366
    DOI: 10.1016/j.iref.2025.104673
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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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