, 1
4076 
5788Tax reduction is an important part of cost reduction that it has attracted the continuous attention of the government. As tax is one of the main sources of government revenue, the local government plays an important role in the tax reduction process. Meanwhile, it is worth noting that the local government is a rational agent, and it has diversified behavior under the development of economical society. Fully understanding the differences of local governments’ income tax reliance behavior will help to identify the obstacles in the process of cost reduction and ensure the implementation of cost reduction. Using Chinese A-share listed companies from 2003 to 2016 and taking enterprise income tax stickiness as the micro-measurement of local governments’ income tax reliance behavior, this paper mainly studies the following questions: First, does the income tax reliance behavior of local governments differ due to enterprises’ property rights and the level of control as enterprises’ profit decline? Second, what factors will moderate the income tax reliance behavior of local governments? Third, will local governments give more financial subsidies to enterprises while they have more income tax reliance on enterprises? This paper finds that the local government shows more income tax reliance on state-owned enterprises, especially on local state-owned enterprises. Further research finds that the promotion pressure, financial pressure, economic cycle, the regional proportion of state-owned enterprises and the government intervention moderate local governments’ income tax reliance behavior. In addition, local governments give more financial subsidies to state-owned enterprises while they have more income tax reliance on state-owned enterprises. This paper makes several contributions. First, based on the existing researches of Anderson, et al.（2003）and Wang, et al.（2018）, this paper analyzes enterprise income tax stickiness from the perspective of local governments. Using enterprise income tax stickiness as the micro-measurement of local governments’ income tax reliance behavior, this paper enriches the research content of income tax stickiness and the research methods of local governments’ tax reliance behavior. Second, this paper finds that the income tax reliance behavior of local governments is more significant in state-owned enterprises, especially in local state-owned enterprises. These findings add to the literature which examines the effect of property rights and corporate tax burden. At the same time, this paper analyzes the factors which will moderate local governments’ income tax reliance behavior, such as promotion pressure, financial pressure, etc, and it provides a comprehensive understanding of local governments’ income tax reliance behavior. Third, this paper examines the relationship between local governments’ income tax reliance behavior and enterprises’ financial subsidies. This has deepened the understanding of the relationship between local governments and enterprises in returning peaches and plums.
/ Journals / Journal of Finance and Economics
Journal of Finance and Economics
LiuYuanchun, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YaoLan BaoXiaohua HuangJun, Vice Editor-in-Chief
Who Is More Vulnerable to the Income Tax Reliance Behavior of Local Governments: State-owned Enterprises or Non-state-owned Enterprises?
Journal of Finance and Economics Vol. 46, Issue 01, pp. 155 - 168,封三 (2020) DOI:10.16538/j.cnki.jfe.2020.01.011
Summary
References
Summary
[1]Cao G, Yuan F, Tao R. Land finance, industrial structure changes and rapid tax revenue growth in China[J]. China Industrial Economy, 2007, (12): 13-21. (In Chinese)
[2]Cao S, Liu X, Zhang W. Fiscal decentralization, local government competition and the actual tax burden of listed companies[J]. The Journal of World Economy, 2009, (4): 69-83. (In Chinese)
[3]Zeng Q, Chen X. State stockholder, excessive employment and labor cost[J]. Economic Research Journal, 2006, (5): 74-86. (In Chinese)
[4]Chen D, Kong M, Wang H. Economic cycle and tax avoidance of state-owned enterprises[J]. Management World, 2016, (5): 46-63. (In Chinese)
[5]Chen D, Chen X, Wan H. Regulation and non-pecuniary compensation in Chinese SOEs[J]. Economic Research Journal, 2005, (2): 92-101. (In Chinese)
[6]Chen J, Li J. Financial decentralization, promotion incentive and local governments’ debt financing activities: Empirical evidence from the perspective of urban construction investment bonds[J]. Accounting Research, 2015, (1): 61-67. (In Chinese)
[7]Chen X. Financial pressure, tax administration and regional inequality[J]. Social Sciences in China, 2016, (4): 53-70. (In Chinese)
[8]Cheng Z, Xia X, Yu M. Government intervention, pyramid structure and investment of local state-owned listed companies[J]. Management World, 2008, (9): 37-47. (In Chinese)
[9]Fan G, Wang X, Ma G. Contribution of marketization to China’s economic growth[J]. Economic Research Journal, 2011, (9): 4-16. (In Chinese)
[10]Fan G, Wang X, Yu J. China’s provincial marketization index report (2016)[M]. Social Science Literature Press, 2017. (In Chinese)
[11]Fan Z, Tian B. Tax competition, tax enforcement and tax avoidance[J]. Economic Research Journal, 2013, (9): 99-111. (In Chinese)
[12]Fang J. Is top management compensation of Chinese public companies sticky?[J]. Economic Research Journal, 2009, (3): 110-124. (In Chinese)
[13]Gao P. Riddle of the sustained and rapid tax increase in China[J]. Economic Research Journal, 2006, (12): 13-23. (In Chinese)
[14]He J. An empirical analysis of the governance structure of listed companies[J]. Economic Research Journal, 1998, (5): 51-58. (In Chinese)
[15]Kong D, Liu S, Wang Y. Market competition, ownership and government subsidy[J]. Economic Research Journal, 2013, (2): 55-67. (In Chinese)
[16]Liu B, Zhang L. Who are stuck with the stickiness of de-capacity: state-owned or non-state-owned enterprises?[J]. Nankai Business Review, 2018, (4): 109-121. (In Chinese)
[17]Liu J, Liu F. Fiscal centralization, government control and corporate tax burden: Evidence from China[J]. Accounting Research, 2014, (1): 21-27. (In Chinese)
[18]Lü B, Guo Q. What are the sources of the rapid growth in Chinese tax revenues? An explanation within the framework of tax capacity and tax effort[J]. Social Sciences in China, 2011, (2): 76-90. (In Chinese)
[19]Ma W, Li Q. From the “helping hand” to the “grabbing hand”: A political economic analysis of the difference of local government’s behavior[J]. Public Finance Research, 2017, (1): 77-88. (In Chinese)
[20]Qian X, Cao T, Li W. Promotion pressure, officials’ tenure and lending behavior of the city commercial banks[J]. Economic Research Journal, 2011, (12): 72-85. (In Chinese)
[21]Tang Q, Luo D. An empirical study on the motivation and effect of government subsidy: Empirical evidence from Chinese listed companies[J]. Journal of Financial Research, 2007, (6): 149-163. (In Chinese)
[22]Wang B, Sun C, Wu L, Jiang G. Tax expense stickiness: Research from the perspective of tax collection of governments[J]. Accounting Research, 2018, (5): 28-35. (In Chinese)
[23]Wang H, Li Q, Xing F. Financial crisis, government subsidies and earnings manipulation: Empirical evidence from Chinese listed companies[J]. Management World, 2014, (7): 157-167.
[24]Wang J. High growth path of centralized tax revenue: Theoretical and empirical analysis[J]. Management World, 2008, (7): 45-52. (In Chinese)
[25]Wu L. State ownership, preferential tax, and corporate tax burdens[J]. Economic Research Journal, 2009, (10): 109-120. (In Chinese)
[26]Yang X, Zhang L, Wu H. Marketization, managerial power and firm cash holdings[J]. Nankai Business Review, 2014, (2): 34-45. (In Chinese)
[27]Ye K, Liu H. Tax administration, income tax cost and earnings management[J]. Management World, 2011, (5): 140-148. (In Chinese)
[28]Yu W, Yin H, Liang P. Tax enforcement activities, fiscal pressure and firms’ financial constraints[J]. China Industrial Economy, 2018, (1): 100-118. (In Chinese)
[29]Zhang T, Zhang S. Biased policy, resource allocation and aggregate productivity[J]. Economic Research Journal, 2016, (2): 126-139. (In Chinese)
[30]Zhou L, Liu C, Li X. Tax effort, tax bureaus and the puzzle of the abnormal tax growth[J]. China Economic Quarterly, 2012, (1): 1-18. (In Chinese)
[31]Zhou L. Governing China’s local officials: An analysis of promotion tournament model[J]. Economic Research Journal, 2007, (7): 36-50. (In Chinese)
[32]Anderson M C, Banker R D, Janakiraman S N. Are selling, general, and administrative costs “sticky”?[J]. Journal of Accounting Research, 2003, 41(1): 47-63.
[33]Banker R D, Byzalov D, Chen L. Employment protection legislation, adjustment costs and cross-country differences in cost behavior[J]. Journal of Accounting and Economics, 2013, 55(1): 111-127.
[34]Blanchard O, Shleifer A. Federalism with and without political centralization: China versus Russia[J]. IMF Staff Papers, 2001, 48(S1): 171-179.
[35]Dechow P M, Dichev I D. The quality of accruals and earnings: The role of accrual estimation errors[J]. Accounting Review, 2002, 77(S1): 35-59.
[36]Fan J P H, Wong T J, Zhang T Y. Politically connected CEOs, corporate governance, and post-IPO performance of China’s newly partially privatized firms[J]. Journal of Financial Economics, 2007, 84(2): 330-357.
[37]Hanlon M, Heitzman S. A review of tax research[J]. Journal of Accounting and Economics, 2010, 50(2-3): 127-178.
[38]Jones J J. Earnings management during import relief investigations[J]. Journal of Accounting Research, 1991, 29(2): 193-228.
[39]Li H B, Zhou L A. Political turnover and economic performance: The incentive role of personnel control in China[J]. Journal of Public Economics, 2005, 89(9-10): 1743-1762.
[40]Weiss D. Cost behavior and analysts’ earnings forecasts[J]. The Accounting Review, 2010, 85(4): 1441-1471.
Cite this article
Liu Bin, Wu Di, Zhang Lieke. Who Is More Vulnerable to the Income Tax Reliance Behavior of Local Governments: State-owned Enterprises or Non-state-owned Enterprises?[J]. Journal of Finance and Economics, 2020, 46(1): 155-168.
Export Citations as:
For
ISSUE COVER
RELATED ARTICLES
