Religion and corporate tax compliance: evidence from Chinese Taoism and Buddhism

Jinghua Wang () and Jiankun Lu ()
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Jinghua Wang: Nanjing Audit University
Jiankun Lu: Zhejiang University of Finance and Economics

Eurasian Business Review, 2021, vol. 11, issue 2, No 6, 327-347

Abstract: Abstract This paper examines the impact of religion (i.e. Buddhism and Taoism on the whole) on corporate tax compliance in China. Using a sample of 13,743 firm-year observations from the Chinese stock market for the period of 2008–2016, we find that firms headquartered in locations with stronger religious atmosphere are more likely to do better in tax compliance. Moreover, the tax compliance effect is moderated by pecuniary motivation and religious intensity, and varies with heterogeneity in formal institutions. The effect is weakened when the pecuniary motivation is strong, such as firms with more institutional ownership or less state ownership. The effect gets strengthened in firms with more female managers, while weakened in firms located in coastal regions which are more vulnerable to culture shocks. The effect is also more pronounced in regions with weaker formal institutions, such as worse legal environment or laxer tax enforcement. Our findings are robust to a battery of robustness checks, and shed light on the role of religion in disciplining corporate tax behaviors.

Keywords: Religion; Nonpecuniary motivation; Formal institution; Corporate tax compliance (search for similar items in EconPapers)
JEL-codes: H26 O17 Z12 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s40821-020-00153-x

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