Abstract

Environmental regulation may lead to firm's behavior changes. This article explores the effects of environmental regulation on corporate tax avoidance activities. Using China's new Environmental Protection Law as a quasi-natural experiment, we construct a difference-in-difference-in-differences(DDD) strategy for estimation. We find that environmental regulation will significantly increase the corporate tax avoidance activities in polluting industries in highly regulated cities. We further examine the heterogeneous effects of political connection, and find that political connection may promote corporate tax avoidance activities under stringent environmental regulation. The promoting effects are mainly due to the political connection with local governments rather than with central government.

Full Text
Published version (Free)

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call