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Corruption, Marketisation and Corporate Tax Management in China: Evidence from Listed Firms

Author

Listed:
  • Chen Zhang

    (Institute of Graduate Studies (IGS), University of Malaya)

  • Kee-Cheok Cheong

    (Institute of China Studies, University of Malaya)

  • Rajah Rasiah

    (Department of Development Studies, Faculty of Economics and Administration, University of Malaya)

Abstract

Most empirical research on the subject of tax management has emphasised the impact of internal corporate governance. Yet, the external governance mechanism regulating corporate behaviour is no less important, but far less studied. This study investigates how corruption and marketisation impact corporate tax management, which lowers corporate tax. It finds an inverted U-shape relationship between corruption and corporate tax management in China during the period of 2008 to 2013, with the effect positive at low to moderate levels of corruption and negative beyond these levels of corruption. However, marketisation, i.e., the greater reliance on market forces, is found to mitigate this impact of corruption on corporate tax management regardless of the level of corruption. In light of these findings, greater reliance on market institutions will directly and indirectly improve corporate decision making.

Suggested Citation

  • Chen Zhang & Kee-Cheok Cheong & Rajah Rasiah, 2017. "Corruption, Marketisation and Corporate Tax Management in China: Evidence from Listed Firms," Malaysian Journal of Economic Studies, Faculty of Business and Economics, University of Malaya & Malaysian Economic Association, vol. 54(2), pages 281-299, December.
    • Handle: RePEc:mjr:journl:v:54:y:2017:i:2:p:281-299
    DOI: 10.22452/MJES.vol54no2.7
    as

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    More about this item

    Keywords

    China; corporate tax management; corruption; marketisaiton;
    All these keywords.

    JEL classification:

    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies

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