 Principal SOE customers and corporate tax avoidance: Evidence from the government arrears clearance reformJiaxin Wang, Jin Chen, Xiang Huang and Zilong Song Energy Economics, 2023, vol. 128, issue C Abstract: While extent literature suggests that major SOE customers can be beneficial to non-SOEs because of SOEs' stable demand and ability to provide credit endorsement, the absolute dominance of major SOE customers in the supply chain can also have adverse effects on firms, such as forcing the appropriation of firms' commercial credits, which imposes supply-chain costs on firms. Using government arrears clearance reform (ACR) as a quasi-natural experiment, we find that an exogenous reduction in supply chain defaults by major SOE customers alleviates firms' financing constraints, including both internal and external financing, and thus inhibits the incentives for tax avoidance by non-SOEs. This effect is stronger for suppliers that are in financial distress, and we also find that regional taxing intensity plays an important complementary role to ACR. Our findings suggest that it is beneficial for governments to raise tax revenues by requiring major SOE customers to reduce supply chain defaults. Keywords: Arrears clearance reform (ACR); Major SOE customers; Corporate tax avoidance; Financing constraints (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:128:y:2023:i:c:s0140988323006552 DOI: 10.1016/j.eneco.2023.107157 Access Statistics for this article Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant More articles in Energy Economics from Elsevier |
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