Can a not-for-profit minority institutional investor affect corporate tax avoidance? Evidence from China

Wen Wen, Fei Qiao, Jingli Feng and Huijie Hu

Asia-Pacific Journal of Accounting & Economics, 2025, vol. 32, issue 2, 377-399

Abstract: We investigate the impact of the China Securities Investor Service Center (CSISC), a not-for-profit minority institutional investor, on corporate tax avoidance. Employing a difference-in-differences (DID) model based on a sample of Chinese listed companies during 2014–2017, we find that CSISC shareholding reduces corporate tax avoidance. We check this finding’s robustness using alternative measures of tax avoidance, alternative sampling, placebo tests, and parallel trend analysis, and our results still hold. In addition, we find the CSISC’s negative impact on corporate tax avoidance is more pronounced in state-owned enterprises (SOEs), firms with worse internal and external corporate governance, and regions with stricter tax enforcement. Further analyses reveal that the improved information environment is a potential channel through which the CSISC inhibits corporate tax avoidance. This paper enriches the literature on the impact of minority shareholder protection mechanism and the determinants of corporate tax avoidance.

Date: 2025
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DOI: 10.1080/16081625.2024.2358077

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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