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 followi...
Sign-in/Register to access full text options 
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 callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
