The extreme outcomes of corporate tax management: Evidence from Chinese listed enterprises

Zhang, Chen and Cheong, Kee Cheok and Rasiah, Rajah (2018) The extreme outcomes of corporate tax management: Evidence from Chinese listed enterprises. Institutions and Economies, 10 (1). pp. 19-52. ISSN 2232-1640

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Official URL: https://ijie.um.edu.my/article/view/9552/6751

Abstract

This study presents an empirical analysis of how corporate tax management and government ownership influence a firm’s stock price crash risk. The study investigates firm-specific stock price crash to corporate tax management based on a sample of Chinese listed enterprises during 2008 to 2013 period and finds that tax management activities can lead to a significant decline in short-term crash risk. However, the results show that tax management would lead to the high probability of future crash risk, which is consistent with agency conflict between management and shareholders. Because of the opacity and complexity of tax management, there exists opportunities for short-term rent-seeking which can lead to future crashes. In addition, the study finds that the positive relationship between tax management and future crash risk is more pronounced in enterprises controlled by the municipal government.

Item Type: Article
Uncontrolled Keywords: Conflict of interest; Corporate tax management; State-controlled enterprises (SOEs); Stock price crash risk
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HC Economic History and Conditions
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 28 Jan 2019 01:37
Last Modified: 28 Jan 2019 01:37
URI: http://eprints.um.edu.my/id/eprint/20172

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