Competition and Corporate Tax Avoidance: Evidence from Chinese Industrial Firms
研究市场竞争如何影响中国工业企业避税行为，发现竞争越激烈，企业避税越多，且处于劣势的企业避税动机更强。
This article investigates whether market competition enhances the incentives of Chinese industrial firms to avoid corporate income tax. We estimate the effects of competition on the relationship between firms'reported accounting profits and their imputed profits based on the national income account. To cope with measurement errors and potential endogeneity, we use instrumental variables, exogenous policy shocks and other robustness analysis. We find robust and consistent evidence that firms in more competitive environments engage in more tax avoidance activities. Moreover, all else equal, firms in relatively disadvantageous positions demonstrate stronger incentives to avoid corporate income tax. © Journal compilation © 2009 by the Royal Economic Society (Registered Charity No. 231508).