Political corruption and corporate tax avoidance: A quasi-natural experiment

Chunguang Ma, Shunfei Feng, Wenhui Huang and Aoyun Chen

International Review of Financial Analysis, 2025, vol. 99, issue C

Abstract: Exploit a quasi-natural experiment created by China's anti-corruption campaigns, we investigate whether and how political corruption affects corporate tax strategies in this study. Taking advantage of a sample of Chinese listed companies, we find robust evidence that levels of local corruption are positively related to corporate tax avoidance. Moreover, we find that CEO traits, including gender, foreign experience, and tenure, perform a significant moderating role in the relationship we identified by influencing CEOs' perceptions of and propensity for bribery. Overall, our study sheds light on the implications of political corruption for corporate tax behavior, thus enriching the literature on corruption and corporate tax behavior.

Keywords: Corruption; Tax avoidance; Bribery; Upper echelons theory (search for similar items in EconPapers)
JEL-codes: F23 G32 G34 M14 M16 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:99:y:2025:i:c:s1057521925000043

DOI: 10.1016/j.irfa.2025.103917

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