IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v58y2022i7p2079-2092.html
   My bibliography  Save this article

How Do Tax Incentives Lead to Investment Shifting? Evidence from China

Author

Listed:
  • Tingting Ni
  • Xinyue Wang
  • Yuetang Wang

Abstract

Corporate VAT planning, though difficult to observe, has become more prominent. By considering the Chinese VAT transition as an external policy shock, this article adopts a difference-in-difference model to study this issue for the period 2006–2009. The results indicate that companies, in particular companies with high financing constraints and low type I agency costs, had investment-shifting behavior, so as to reduce the tax burden. Compared with agency costs, financing constraints have a greater influence on firms’ shifting. Further, the market has a positive attitude toward shifting of high financing constraints companies, but a negative attitude toward that of high agency costs companies.

Suggested Citation

  • Tingting Ni & Xinyue Wang & Yuetang Wang, 2022. "How Do Tax Incentives Lead to Investment Shifting? Evidence from China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(7), pages 2079-2092, May.
    • Handle: RePEc:mes:emfitr:v:58:y:2022:i:7:p:2079-2092
    DOI: 10.1080/1540496X.2021.1956900
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2021.1956900
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2021.1956900?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.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guo, Yue Mei & Li, Xiao, 2023. "The impact of greater VAT tax neutrality on total factor productivity: Evidence from China’s VAT credit refund reform in 2018," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 922-936.
    2. Del Gaudio, Belinda Laura & Gallo, Serena & Previtali, Daniele, 2024. "Exploring the drivers of investment in Fintech: Board composition and home bias in banking," Global Finance Journal, Elsevier, vol. 60(C).

    More about this item

    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:mes:emfitr:v:58:y:2022:i:7:p:2079-2092. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    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.