Dual Holding, Corporate Tax Avoidance, and Mediation Role of Corporate Governance

Zezhong Meng ()
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Zezhong Meng: Wuhan College

A chapter in Proceedings of the 2023 3rd International Conference on Financial Management and Economic Transition (FMET 2023), 2024, pp 116-126 from Springer

Abstract: Abstract This paper investigates the relationship between dual-holding firms and corporate tax avoidance practices. Dual holding is defined as a situation where at least one financial institution holds both debt and equity in a company simultaneously. I find that dual holding firms significantly increase corporate tax avoidance behavior. I control for the endogeneity issue by using mergers between lenders and institutional shareholders in the same firms as plausibly exogenous shocks, and my results still hold. Through cross-sectional analysis, I also find that the increase in tax avoidance behavior by dual holding companies is more significant in situations where corporate governance is weaker and where information transparency is lower. This suggests that corporate governance and information channels are the reasons why dual holding firms engage in different tax avoidance behaviors.

Keywords: Dual holdings; Corporate tax avoidance; Corporate Governance (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-272-9_13

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DOI: 10.2991/978-94-6463-272-9_13

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