Agency costs and tax planning when the government is a major Shareholder

By Mark Bradshaw, Guanmin Liao, M. Ma. Journal of Accounting & Economics, 2019

309 citations recorded by the source corpus.

In state owned enterprises (SOEs), taxes are a dividend to the controlling shareholder, the state, but a cost to other shareholders. We examine publicly traded firms in China and find significantly lower tax avoidance by SOEs relative to non-SOEs. The differences are pronounced for locally versus centrally-owned SOEs and during the year of SOE term performance evaluations. We link our results to managerial incentives through promotion tests, finding that higher SOE tax rates are associated with higher promotion frequencies of SOE managers. Our results suggest managerial incentives and tax reporting are conditional on the ownership structure of the firm.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/2bdbc39d4d53b1d33ffa075f494633e921f21d26

Citations in the corpus

• Directors with foreign experience and corporate tax avoidance (2020, unknown): “, 2012; Bradshaw et al., 2019). First, the government's goal is not to maximize the value of SOEs but to maximize social welfare. It is possible that higher tax payments are necessary for the government to achieve certain social objects. Bradshaw et al. (2019) examine publicly traded firms in China ”