Tax avoidance and firm risk: evidence from China
| Autor: | Meiting Lu, Yaowen Shan, Zhuoan Feng, Yuqiang Cao |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
050208 finance
Future risk media_common.quotation_subject 05 social sciences Economics Econometrics and Finance (miscellaneous) Sample (statistics) 050201 accounting Monetary economics 1402 Applied Economics 1501 Accounting Auditing and Accountability 1502 Banking Finance and Investment Tax avoidance Affect (psychology) Firm risk Return volatility Cash Accounting 8. Economic growth 0502 economics and business Economics China Finance health care economics and organizations media_common |
| Popis: | Prior literature documents puzzling evidence revealing that tax avoidance activities do not affect firm‐specific risk. Using an extended US sample, we find that lower cash effective tax rates (ETRs) are associated with higher future return volatility, supporting the traditional view of tax risk–return trade‐off. In sharp contrast to the US evidence, our analysis of Chinese firms suggests that Chinese state‐owned enterprises (SOEs) with lower cash and GAAP ETRs tend to have lower future risk. In addition, we adopt a difference‐in‐differences approach based on the variations generated by two exogenous, anti‐tax avoidance regulations in China but find no evidence suggesting a causal relationship between tax avoidance and firm risk. Overall, our results suggest that the relationship between tax avoidance and risk varies across countries, sample periods and tax aggressiveness measures, and we highlight the importance of addressing the endogenous nature in future research. |
| Databáze: | OpenAIRE |
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