Tax authority monitoring and corporate information disclosure quality in China

Yongwei Ye, Lin Zeng, Yunqing Tao and Feng Yun

International Review of Financial Analysis, 2023, vol. 90, issue C

Abstract: This paper studies the effect of tax enforcement on corporate information disclosure quality by exploiting the enforcement of the “Golden Tax-III” project in China as an exogenous variation in the tax authority monitoring. Our difference-in-differences estimates show that an increase in tax monitoring improves corporate information disclosure quality. This effect is more pronounced in firms with weak external supervision, weak internal governance, and firms located in non-eastern areas, and areas with lower fiscal pressure. Mechanism tests show that tax authority monitoring improves information disclosure quality through tax compliance channels. Our findings document that public enforcement can exert a governance effect on enterprises, especially in developing countries and areas.

Keywords: Tax authority monitoring; Corporate information disclosure quality; Tax compliance; Public enforcement (search for similar items in EconPapers)
JEL-codes: D21 G18 G34 H26 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:90:y:2023:i:c:s1057521923003885

DOI: 10.1016/j.irfa.2023.102872

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