The tax burden of listed companies in China

Der-Fen Huang, Ni-Yun Chen and Ko-Wei Gao

Applied Financial Economics, 2013, vol. 23, issue 14, 1169-1183

Abstract: This study examines factors affecting effective tax rates (ETRs) in China, using firms trading in the Shanghai and Shenzhen stock exchange markets from 1999 to 2008, and documents four key determinants, including (i) firm-specific attributes, (ii) ownership structure, (iii) industry upgrading and (iv) tax reforms in the form of cutting tax incentives. Consistent with prior findings, ETRs are positively related to firm size, as suggested by the political cost theory. Moreover, the relation between ETRs and financial leverage is nonlinear. ETRs are negatively related to financial leverage, but this relation becomes less negative as leverage keeps increasing. ETRs are also positively related to inventory intensity. On the other hand, ETRs are negatively related to the percentage of shares held by foreign stockholders. In addition, lower ETRs are found in high-tech industries which have been deemed more valuable by the government, and therefore receive more tax incentives. Finally, ETRs have increased following the 2002 tax reform, which eliminated the refunding of firms' tax prepayments. Our results offer insights for policy-makers interested in enhancing tax effects and improving the tax system in China.

Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/09603107.2013.786163 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:23:y:2013:i:14:p:1169-1183

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAFE20

DOI: 10.1080/09603107.2013.786163

Access Statistics for this article

Applied Financial Economics is currently edited by Anita Phillips

More articles in Applied Financial Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().