Environmental regulation and corporate tax avoidance：A quasi-natural experiments study based on China's new environmental protection law

Does the Carbon Emissions Trading Policy Increase Corporate Tax Avoidance? Evidence from China

“…Existing studies confirm the effects of environmental regulation on industrial structural upgrading (Wang et al, 2021), corporate total factor productivity (Gray, 1987), and corporate behaviors such as innovation, investment, location, export, and labor demand (Porter and Linde, 1995;Hering and Poncet, 2014;Cai et al, 2016;Shen et al, 2017;Shi et al, 2018;Li et al, 2021). Geng et al (2021) and Yu et al (2021) validate the effect of command and control on the behavior of firms based on the 11th Five-Year Plan and the Environmental Protection Law in China, respectively. Compared with other policies, market-incentivized environmental regulation can provide strong incentives for firms to sell emission permits that exceed the standards.…”

“…Based on previous studies, we also control for other characteristics that may affect tax avoidance, including Size, return on assets (ROA), asset-liability ratio (Leverage), the intensity of fixed assets (Capital), inventory density (Inventory), Age, and level of cash holdings (Cash). Of these, Size is calculated as the log of the corporate total assets, ROA is measured as net income to total assets, Leverage is calculated as total liabilities to total assets, Capital is calculated as fixed assets to total assets at year-end, Inventory is calculated as net inventory to total assets at the end of year, Age is calculated as the log of the corporate years of existence, and Cash is calculated as the balance of cash and cash equivalents as a share of total assets (Stickney and McGee, 1982;Zimmerman, 1983;Gupta and Newberry, 1997;Rego, 2003;Cai and Liu, 2009;Richardson et al, 2016;Yu et al, 2021).…”

“…After establishing the carbon emissions market, firms need additional costs for quota trading, investment, innovation, management, and other behavior adjustments. Environmental regulation may also influence the adjustment of corporate tax decisions (Geng et al, 2021;Yu et al, 2021). As local governments pay more attention to environmental governance, the bargaining power of environmental firms increases, which may help firms obtain a more lenient tax collection environment and tax incentives (Mills et al, 2013).…”

“…As local governments pay more attention to environmental governance, the bargaining power of environmental firms increases, which may help firms obtain a more lenient tax collection environment and tax incentives (Mills et al, 2013). When firms have stronger connections with local governments, firms can reduce their own tax burden by exerting political influence (Yu et al, 2021). In addition, there may be a tradeoff between corporate tax behavior and corporate environmental performance disclosure as two important CSR elements.…”

Dynamic Impact of Environmental Regulation on Environmental Performance in China: New Evidence from a Semiparametric Additive Panel Analysis

“…Since the reform and opening-up, China's economy has been growing at a high rate for a long time. However, in the midst of rapid economic growth, some problems, such as excessive resource consumption and serious environmental pollution, have become increasingly prominent [5]. Ebenstein [6] argued that the impact of pollution from economic growth on the life expectancy of Chinese people is considered a serious obstacle to improving health.…”