The impact of tax digitalization on corporate salary structures

Abstract

Against the backdrop of rapid development in tax digitalization, exploring its impact on corporate salary structures has emerged as a significant topic in the realms of China's economy and business management. This study, set against the Phase III Golden Tax Project, utilizes data from Chinese listed companies between 2009 and 2021 to examine the effects of tax digitalization on corporate salary structures, particularly on the pay gap between executives and regular employees. The findings reveal that tax digitalization has narrowed this pay disparity. These results were further validated through robustness tests. Mechanism tests indicate that this effect is primarily achieved through improving information asymmetry and reducing agency costs. Moreover, the study discovers that tax digitalization has a heterogeneous impact on the pay gap across companies of different sizes and ownership types. Finally, the paper proposes policy recommendations based on these findings.