No CrossRef data available.
Article contents
Multiple Large Shareholders, Identity, and Corporate Tax Avoidance
Published online by Cambridge University Press: 15 April 2024
Abstract
In recent years, the variation in firms' tax-avoidance behavior has attracted a lot of attention, both theoretically and empirically. This study investigates the governance role of multiple large shareholders in firms' tax-avoidance behavior, using a sample of Chinese state-controlled listed firms over the period 2004–2016. We find that the ownership stake of a firm's largest shareholder is negatively associated with tax avoidance among state-controlled firms. Second, other large non-state shareholders negatively affect tax avoidance of state-controlled firms. The former effect is particularly strong when the local government is the controlling shareholder. Finally, differences in institutional quality influence the largest shareholder's tendency to engage in tax avoidance in state-controlled firms. For state-controlled firms, a better institutional environment elicits more tax avoidance and thus curtails minority-investor expropriation.
摘要
近年来，企业税收筹划行为的演变吸引了理论研究和实证研究的广泛关注。本文选取 2004 年至 2016 年中国国有控股上市公司为研究对象，深入分析了多个大股东在企业税务筹划中的治理作用。研究发现，国有控股企业第一大股东的持股比例与税收筹划行为呈显著的负相关关系。其次，其他非国有性质的大股东对国有控股企业的税收筹划行为也有抑制作用，特别是当控股股东为地方政府时，该效应更为突出。研究还发现，不同的制度环境质量对国有控股企业第一大股东实施税务筹划的倾向产生影响，良好的制度环境促进了国有企业的税收筹划行为，从而降低了对中小投资者权益的侵占。
Keywords
- Type
- Article
- Information
- Copyright
- Copyright © The Author(s), 2024. Published by Cambridge University Press on behalf of International Association for Chinese Management Research
References
Allen, F., Qian, J., & Qian, M. 2005. Law, finance, and economic growth in China. Journal of Financial Economics, 77(1): 57–116.CrossRefGoogle Scholar
Attig, N., El Ghoul, S., & Guedhami, O. 2009. Do multiple large shareholders play a corporate governance role? Evidence from East Asia. Journal of Financial Research, 32(4): 395–422.CrossRefGoogle Scholar
Attig, N., Guedhami, O., & Mishra, D. 2008. Multiple large shareholders, control contests, and implied cost of equity. Journal of Corporate Finance, 14(5): 721–737.CrossRefGoogle Scholar
Attig, N., El Ghoul, S., Guedhami, O., & Rizeanu, S. 2013. The governance role of multiple large shareholders: evidence from the valuation of cash holdings. Journal of Management & Governance, 17: 419–451.CrossRefGoogle Scholar
Balli, H. O., & Sørensen, B. E. 2013. Interaction effects in econometrics. Empirical Economics, 45: 583–603.CrossRefGoogle Scholar
Berkman, H., Cole, R. A., & Fu, L. J. 2009. Expropriation through loan guarantees to related parties: Evidence from China. Journal of Banking & Finance, 33(1): 141–156.CrossRefGoogle Scholar
Bharath, S. T., Jayaraman, S., & Nagar, V. 2013. Exit as governance: An empirical analysis. The Journal of Finance, 68(6): 2515–2547.CrossRefGoogle Scholar
Blouin, J. 2014. Defining and measuring tax planning aggressiveness. National Tax Journal, 67(4): 875–899.CrossRefGoogle Scholar
Boateng, A., & Huang, W. 2017. Multiple large shareholders, excess leverage and tunneling: Evidence from an emerging market. Corporate Governance: An International Review, 25(1): 58–74.CrossRefGoogle Scholar
Bolton, P., & Von Thadden, E.-L. 1998. Blocks, liquidity, and corporate control. The Journal of Finance, 53(1): 1–25.CrossRefGoogle Scholar
Boubaker, S., & Sami, H. 2011. Multiple large shareholders and earnings informativeness. Review of Accounting and Finance, 10(3): 246–266.CrossRefGoogle Scholar
Bradshaw, M., Liao, G., & Ma, M. S. 2019. Agency costs and tax planning when the government is a major shareholder. Journal of Accounting and Economics, 67(2-3): 255–277.CrossRefGoogle Scholar
Brühne, A. I., & Jacob, M. 2021. Corporate tax avoidance and the real effects of taxation: A review. SSRN Working Paper.Google Scholar
Bu, N., & Roy, J. P. 2015. Guanxi practice and quality: A comparative analysis of Chinese managers’ business-to-business and business-to-government ties. Management and Organization Review, 11(2): 263–287.CrossRefGoogle Scholar
Cen, W., Tong, N., & Sun, Y. 2017. Tax avoidance and cost of debt: Evidence from a natural experiment in China. Accounting & Finance, 57(5): 1517–1556.CrossRefGoogle Scholar
Chan, K. H., Lin, K. Z., & Mo, P. L. L. 2010. Will a departure from tax-based accounting encourage tax noncompliance? Archival evidence from a transition economy. Journal of Accounting and Economics, 50(1): 58–73.CrossRefGoogle Scholar
Chan, K. H., Mo, P. L., & Zhou, A. Y. 2013. Government ownership, corporate governance and tax aggressiveness: Evidence from China. Accounting & Finance, 53(4): 1029–1051.CrossRefGoogle Scholar
Chan, K. H., Mo, P. L. L., & Tang, T. 2016. Tax avoidance and tunneling: Empirical analysis from an agency perspective. Journal of International Accounting Research, 15(3): 49–66.CrossRefGoogle Scholar
Chen, D., & Luo, W. 2015. Does corporate tax avoidance influence audit pricing? Economic Management Journal, 3: 98–109.Google Scholar
Chen, D., Jian, M., & Xu, M. 2009. Dividends for tunneling in a regulated economy: The case of China. Pacific-Basin Finance Journal, 17(2): 209–223.CrossRefGoogle Scholar
Chen, D., Khan, S., Yu, X., & Zhang, Z. 2013. Government intervention and investment comovement: Chinese evidence. Journal of Business Finance & Accounting, 40(3-4): 564–587.CrossRefGoogle Scholar
Chen, G., Firth, M., & Xu, L. 2009. Does the type of ownership control matter? Evidence from China's listed companies. Journal of Banking & Finance, 33(1): 171–181.CrossRefGoogle Scholar
Chen, H., Tang, S., Wu, D., & Yang, D. 2021. The political dynamics of corporate tax avoidance: The Chinese experience. The Accounting Review, 96(5): 157–180.CrossRefGoogle Scholar
Chen, K. C. W., & Yuan, H. 2004. Earnings management and capital resource allocation: evidence from China's accounting-based regulation of rights issues. The Accounting Review, 79(3): 645–665.CrossRefGoogle Scholar
Chen, S., Chen, X., Cheng, Q., & Shevlin, T. 2010. Are family firms more tax aggressive than non-family firms? Journal of Financial Economics, 95(1): 41–61.CrossRefGoogle Scholar
Cheng, M., Lin, B., & Wei, M. 2013. How does the relationship between multiple large shareholders affect corporate valuations? Evidence from China. Journal of Economics and Business, 70: 43–70.CrossRefGoogle Scholar
Cheung, Y.-L., Rau, P. R., & Stouraitis, A. 2006. Tunneling, propping, and expropriation: Evidence from connected party transactions in Hong Kong. Journal of Financial Economics, 82(2): 343–386.CrossRefGoogle Scholar
Cheung, Y.-L., Rau, P. R., & Stouraitis, A. 2010. Helping hand or grabbing hand? Central vs. local government shareholders in Chinese listed firms. Review of Finance, 14(4): 669–694.CrossRefGoogle Scholar
Claessens, S., Djankov, S., & Lang, L. H. 2000. The separation of ownership and control in East Asian corporations. Journal of Financial Economics, 58(1-2): 81–112.CrossRefGoogle Scholar
Cullinan, C. P., Wang, F., Wang, P., & Zhang, J. 2012. Ownership structure and accounting conservatism in China. Journal of International Accounting, Auditing and Taxation, 21(1): 1–16.CrossRefGoogle Scholar
DeBacker, J., Heim, B. T., & Tran, A. 2015. Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States. Journal of Financial Economics, 117(1): 122–138.CrossRefGoogle Scholar
Dharwadkar, B., George, G., & Brandes, P. 2000. Privatization in emerging economies: An agency theory perspective. Academy of Management Review, 25(3): 650–669.CrossRefGoogle Scholar
Dyreng, S. D., Hanlon, M., & Maydew, E. L. 2008. Long-run corporate tax avoidance. The Accounting Review, 83(1): 61–82.CrossRefGoogle Scholar
Edmans, A., Fang, V. W., & Zur, E. 2013. The effect of liquidity on governance. The Review of Financial Studies, 26(6): 1443–1482.CrossRefGoogle Scholar
Faccio, M., Lang, L. H., & Young, L. 2001. Dividends and expropriation. American Economic Review, 91(1): 54–78.CrossRefGoogle Scholar
Fan, G., Wang, X., & Zhu, H. 2016. NERI index of marketization of China's provinces. Beijing: Economic Science Press.Google Scholar
Fang, Y., Hu, M., & Yang, Q. 2018. Do executives benefit from shareholder disputes? Evidence from multiple large shareholders in Chinese listed firms. Journal of Corporate Finance, 51: 275–315.CrossRefGoogle Scholar
Firth, M., Fung, P. M., & Rui, O. M. 2006. Corporate performance and CEO compensation in China. Journal of Corporate Finance, 12(4): 693–714.CrossRefGoogle Scholar
Gallemore, J., Maydew, E. L., & Thornock, J. R. 2014. The reputational costs of tax avoidance. Contemporary Accounting Research, 31(4): 1103–1133.CrossRefGoogle Scholar
Guo, C., Sarkar, S., Zhu, J., & Wang, Y. J. 2020. R&D investment, business performance, and moderating role of Guanxi: Evidence from China. Industrial Marketing Management, 91: 55–63.CrossRefGoogle Scholar
Gupta, S., & Newberry, K. 1997. Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data. Journal of Accounting and Public Policy, 16(1): 1–34.CrossRefGoogle Scholar
Hanlon, M., & Heitzman, S. 2010. A review of tax research. Journal of Accounting and Economics, 50(2–3): 127–178.CrossRefGoogle Scholar
Hao, Y., & Gong, L. 2017. State and private non-controlling shareholders in SOEs and private firms, and firm performance. Economic Research Journal, 52(3): 122–135.Google Scholar
Hasan, I., Hoi, C. K. S., Wu, Q., & Zhang, H. 2014. Beauty is in the eye of the beholder: The effect of corporate tax avoidance on the cost of bank loans. Journal of Financial Economics, 113(1): 109–130.CrossRefGoogle Scholar
Haw, I.-M., Qi, D., Wu, D., & Wu, W. 2005. Market consequences of earnings management in response to security regulations in China. Contemporary Accounting Research, 22(1): 95–140.CrossRefGoogle Scholar
Hill, A. D., Johnson, S. G., Greco, L. M., O'Boyle, E. H., & Walter, S. L. 2021. Endogeneity: A review and agenda for the methodology-practice divide affecting micro and macro research. Journal of Management, 47(1): 105–143.CrossRefGoogle Scholar
Huyghebaert, N., & Quan, Q. 2009. Share issuing privatizations in China: Sequencing and its effects on public share allocation and underpricing. Journal of Comparative Economics, 37(2): 306–320.CrossRefGoogle Scholar
Huyghebaert, N., & Wang, L. 2012. Expropriation of minority investors in Chinese listed firms: The role of internal and external corporate governance mechanisms. Corporate Governance: An International Review, 20(3): 308–332.CrossRefGoogle Scholar
Jacob, M. 2022. Real effects of corporate taxation: A review. European Accounting Review, 31(1): 269–296.CrossRefGoogle Scholar
Jensen, M. C., & Meckling, W. H. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4): 305–360.CrossRefGoogle Scholar
Jiang, F., Cai, W., Wang, X., & Zhu, B. 2018. Multiple large shareholders and corporate investment: Evidence from China. Journal of Corporate Finance, 50: 66–83.CrossRefGoogle Scholar
Jiang, G., Lee, C. M., & Yue, H. 2010. Tunneling through intercorporate loans: The China experience. Journal of Financial Economics, 98(1): 1–20.CrossRefGoogle Scholar
Laeven, L., & Levine, R. 2007. Complex ownership structures and corporate valuations. The Review of Financial Studies, 21(2): 579–604.CrossRefGoogle Scholar
La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. 1999. Corporate ownership around the world. Journal of Finance, 54(2): 471–517.CrossRefGoogle Scholar
La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. W. 1998. Law and finance. Journal of Political Economy, 106(6): 1113–1155.CrossRefGoogle Scholar
Li, K., Wang, T., Cheung, Y.-L., & Jiang, P. 2011. Privatization and risk sharing: Evidence from the split share structure reform in China. The Review of Financial Studies, 24(7): 2499–2525.CrossRefGoogle Scholar
Li, O. Z., Liu, H., & Ni, C. 2017. Controlling shareholders’ incentive and corporate tax avoidance: A natural experiment in China. Journal of Business Finance & Accounting, 44(5–6): 697–727.CrossRefGoogle Scholar
Li, W., Song, C., Xu, S., & Yi, J. 2022. High sex ratios and household portfolio choice in China. Journal of Human Resources, 57(2): 465–490.CrossRefGoogle Scholar
Liao, L., Liu, B., & Wang, H. 2014. China's secondary privatization: Perspectives from the split-share structure reform. Journal of Financial Economics, 113(3): 500–518.CrossRefGoogle Scholar
Lin, T.-J., Tsai, H.-F., Imamah, N., & Hung, J.-H. 2016. Does the identity of multiple large shareholders affect the value of excess cash? Evidence from China. Pacific-Basin Finance Journal, 40: 173–190.CrossRefGoogle Scholar
Liu, H., Wang, X., & Zhao, Y. 2022. The estimated error of current income tax expense based on statement data under China accounting standards and its impact. Management World, 38: 174–193.Google Scholar
Ma, C., & Yasir, L. 2023. Carrot or stick? CSR and firm financial performance. Journal of Business Ethics, 188: 349–365.CrossRefGoogle Scholar
Maury, B., & Pajuste, A. 2005. Multiple large shareholders and firm value. Journal of Banking & Finance, 29(7): 1813–1834.CrossRefGoogle Scholar
Milhaupt, C. J., & Zheng, W. 2015. Reforming China's state-owned enterprises: Institutions, not ownership. Regulating the visible hand? The institutional implications of Chinese state capitalism : 175–201. Oxford: Oxford University Press.CrossRefGoogle Scholar
Mishra, D. R. 2011. Multiple large shareholders and corporate risk taking: Evidence from East Asia. Corporate Governance: An International Review, 19(6): 507–528.CrossRefGoogle Scholar
Morck, R., Wolfenzon, D., & Yeung, B. 2005. Corporate governance, economic entrenchment, and growth. Journal of Economic Literature, 43(3): 655–720.CrossRefGoogle Scholar
Ouyang, C., Xiong, J., & Huang, K. 2020. Do multiple large shareholders affect tax avoidance? Evidence from China. International Review of Economics & Finance, 67: 207–224.CrossRefGoogle Scholar
Pagano, M., & Röell, A. 1998. The choice of stock ownership structure: Agency costs, monitoring, and the decision to go public. The Quarterly Journal of Economics, 113(1): 187–225.CrossRefGoogle Scholar
Redding, G. 1995. Overseas Chinese networks: Understanding the enigma. Long Range Planning, 28(1): 61–69.CrossRefGoogle Scholar
Richardson, G., Wang, B., & Zhang, X. 2016. Ownership structure and corporate tax avoidance: Evidence from publicly listed private firms in China. Journal of Contemporary Accounting & Economics, 12(2): 141–158.CrossRefGoogle Scholar
Shackelford, D. A., & Shevlin, T. 2001. Empirical tax research in accounting. Journal of Accounting and Economics, 31(1–3): 321–387.CrossRefGoogle Scholar
Shleifer, A., & Vishny, R. W. 1986. Large shareholders and corporate control. Journal of Political Economy, 94(3): 461–488.CrossRefGoogle Scholar
Shleifer, A., & Vishny, R. W. 1997. A survey of corporate governance. The Journal of Finance, 52(2): 737–783.CrossRefGoogle Scholar
Solarino, A. M., & Boyd, B. K. 2020. Are all forms of ownership prone to tunneling? A meta-analysis. Corporate Governance: An International Review, 28(6): 488–501.CrossRefGoogle Scholar
Stiglitz, J. E. 2010. Government failure vs. market failure: Principles of regulation. In Balleisen, E. J. & Moss, D. A. (Eds.), Government and markets: Toward a new theory of regulation: 13–51. New York: Cambridge University Press.Google Scholar
Tang, T. Y. H. 2020. A review of tax avoidance in China. China Journal of Accounting Research, 13(4): 327–338.CrossRefGoogle Scholar
Tang, T. Y. H., & Firth, M. 2012. Earnings persistence and stock market reactions to the different information in book-tax differences: Evidence from China. The International Journal of Accounting, 47(3): 369–397.CrossRefGoogle Scholar
Tang, T., Mo, P. L. L., & Chan, K. H. 2017. Tax collector or tax avoider? An investigation of intergovernmental agency conflicts. The Accounting Review, 92(2): 247–270.CrossRefGoogle Scholar
Tian, G., Si, Y., Han, J., & Bian, Y. 2016. Media coverage and tax aggressiveness – A study based on corporate governance. Journal of Management Science, 29: 104–121.Google Scholar
Wang, F., Xu, S., Sun, J., & Cullinan, C. P. 2020. Corporate tax avoidance: A literature review and research agenda. Journal of Economic Surveys, 34(4): 793–811.CrossRefGoogle Scholar
Wang, L. 2015. Protection or expropriation: Politically connected independent directors in China. Journal of Banking & Finance, 55: 92–106.CrossRefGoogle ScholarPubMed
Wang, Q., Wong, T.-J., & Xia, L. 2008. State ownership, the institutional environment, and auditor choice: Evidence from China. Journal of Accounting and Economics, 46(1): 112–134.CrossRefGoogle Scholar
Wilde, J. H., & Wilson, R. J. 2018. Perspectives on corporate tax planning: Observations from the past decade. The Journal of the American Taxation Association, 40(2): 63–81.CrossRefGoogle Scholar
Wooldridge, J. M. 2010. Econometric analysis of cross section and panel data. Cambridge, MA: MIT press.Google Scholar
Wright, M., Wood, G., Musacchio, A., Okhmatovskiy, I., Grosman, A., & Doh, J. P. 2021. State capitalism in international context: Varieties and variations. Journal of World Business, 56(2): 101160.CrossRefGoogle Scholar
Ye, K., Hou, W., & Huang, Z. 2018. Tax avoidance behavior of listed firms in China: Some facts and explanations. Contemporary Accounting Review, 11(3): 24–46.Google Scholar
Young, M. N., Peng, M. W., Ahlstrom, D., Bruton, G. D., & Jiang, Y. 2008. Corporate governance in emerging economies: A review of the principal–principal perspective. Journal of Management Studies, 45(1): 196–220.CrossRefGoogle Scholar
Zhang, C. 2019. How much do state-owned enterprises contribute to China's GDP and employment? (Chinese). Washington, DC: World Bank Group.CrossRefGoogle Scholar
Zhang, M., Gao, S., Guan, X., & Jiang, F. 2014. Controlling shareholder-manager collusion and tunneling: Evidence from China. Corporate Governance: An International Review, 22(6): 440–459.CrossRefGoogle Scholar
Zhang, S., & Zhang, Z. 2022. Evaluation of doing business in Chinese provinces. In Peking University Open Research Data Platform. V3. Available from: https://opendata.pku.edu.cn/dataset.xhtml?persistentId=doi:10.18170/DVN/OCW4VZGoogle Scholar