The impact of political connections on corporate tax burden: Evidence from the Chinese market

Wang, Litan; You, Kefei

doi:10.1016/j.frl.2022.102944

Cited by 20 publications

(5 citation statements)

References 30 publications

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“…This finding supports the grabbing hand theory and previous studies (Wahab et al. , 2017; Wang and You, 2022).…”

Section: Resultssupporting

confidence: 93%

“…As the payment of tax equates to a transfer of wealth from shareholders to other stakeholders, less ethical firms choose to reduce their tax burden to increase their accounting tax figure. This finding supports the grabbing hand theory and previous studies (Wahab et al, 2017;Wang and You, 2022).…”

Section: Multivariate Testssupporting

confidence: 93%

“…As in previous research, this study used profitability (ROA), firm size, leverage, growth and capital expenditure as control variables to reflect firm characteristics (Lin et al. , 2018; Wang and You, 2022). The data were divided into two subsamples according to the CSR mean value.…”

Section: Methodsmentioning

confidence: 99%

“…Although previous studies have found that political connection is positively associated with tax aggressiveness (Wahab et al. , 2017; Wang and You, 2022), researchers in Indonesia have reported mixed findings (Iswari et al. , 2019; Fasita et al.…”

Section: Literature Reviewmentioning

confidence: 95%

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Political connection as a double-edged sword: the case of tax aggressiveness practice during the COVID-19 pandemic

Rudyanto

Julisar

Debora

2023

AJAR

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PurposeThis research aims to examine the association between political connection and tax aggressiveness during the COVID-19 pandemic and the role of business ethics in the association between political connection and tax aggressiveness.Design/methodology/approachThis study employs a multiple regression method for 147 manufacturing firms listed on the Indonesia Stock Exchange during the pandemic era.FindingsPolitical connection has no association with tax aggressiveness. However, political connection has a negative (positive) association with tax aggressiveness in more (less) ethical firms. The results are robust after controlling for year-fixed effects, endogeneity issues and other tax aggressiveness measurements.Originality/valuePolitical connection is often cited as the driver of unethical business, including tax aggressiveness. However, this paper claims and finds that political connection is a double-edged sword. Ethical firms use political connection to reduce their tax aggressiveness, and vice versa. Previous research has paid little attention to this topic. This paper also uses COVID-19 as a natural experiment to highlight the importance of corporate social responsibility activities as business ethics.

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“…This finding supports the grabbing hand theory and previous studies (Wahab et al. , 2017; Wang and You, 2022).…”

Section: Resultssupporting

confidence: 93%

Section: Multivariate Testssupporting

confidence: 93%

Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 95%

See 2 more Smart Citations

Political connection as a double-edged sword: the case of tax aggressiveness practice during the COVID-19 pandemic

Rudyanto

Julisar

Debora

2023

AJAR

View full text Add to dashboard Cite

show abstract

“…Fan et al [ 9 ] and Lu [ 12 ] found that enterprises connected with the government had better-protected private property or easier access to government subsidies [ 23 ]. Meanwhile, various advantages offered by political connections include tax benefits [ 24 , 25 ] and innovation benefits [ 26 ]. For example, Faccio et al [ 14 ] observed that PSEs operated by entrepreneurs with political identities had gained tax advantages.…”

Section: Theoretical Analysis and Hypothesesmentioning

confidence: 99%

Corporate social responsibility, political connections, and barrier industry diversification: Evidence from China

Zhang,

Wang,

Wen

2024

Heliyon

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Financial investment by non-financial firms: does it affect audit quality?

Wang,

You,

Chen

2024

J Manag Gov

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In the context of the global trend of increasing financial investment by non-financial firms, this study investigates how this process affects the audit quality of these firms. Employing data of Chinese listed non-financial firms from 2011 to 2020, we first examine whether the increasing proportion of financial assets in the total assets has an adverse impact on the audit quality of these firms. We then analyze the mediation effect of operational volatility on such impact by adopting the mediation test of the modified Sobel’s z and the bootstrap test. We find that a higher proportion of financial assets to total assets lowers the audit quality, confirming that the financialization of non-financial firms deteriorates their audit quality. Furthermore, the mediation tests show that operational volatility is an important channel for this negative effect.

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The impact of political connections on corporate tax burden: Evidence from the Chinese market

Cited by 20 publications

References 30 publications

Political connection as a double-edged sword: the case of tax aggressiveness practice during the COVID-19 pandemic

Political connection as a double-edged sword: the case of tax aggressiveness practice during the COVID-19 pandemic

Corporate social responsibility, political connections, and barrier industry diversification: Evidence from China

Financial investment by non-financial firms: does it affect audit quality?

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