Environmental regulation and corporate tax avoidance—Evidence from China

Xiaokang Yang, Junbing Xu, Minling Zhu and Yinglong Yang

PLOS ONE, 2022, vol. 17, issue 1, 1-12

Abstract: In this study, we used a difference-in-difference (DID) approach to analyze the effect of environmental regulation on corporate tax avoidance behavior based on China’s carbon emissions trading pilot policy of 2013. Our findings were as follows: (1) Environmental regulation has led companies to adopt further tax evasion behaviors. Furthermore, the core conclusion was confirmed after a series of robust and endogenous tests, such as parallel trends and PSM-DID (propensity score matching-difference-in-difference). (2) Environmental regulations increase tax avoidance activities by reducing corporate cash flows. (3) The influence of environmental regulation on firm tax evasion is highly pronounced among non-state-owned enterprises, big-scale enterprises, and enterprises with a high degree of industry competition.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0261037

DOI: 10.1371/journal.pone.0261037

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