Government Ownership and Corporate Tax Evasion: Evidence from China

63 Pages Posted: 2 May 2018 Last revised: 7 Nov 2022

See all articles by Travis Chow

Travis Chow

The University of Hong Kong

Bin Ke

National University of Singapore

Hongqi Yuan

Fudan University - School of Management

Yao Zhang

Tongji University - Accounting Department

Date Written: March 13, 2022

Abstract

We examine the effect of government ownership, a first-order defining characteristic of publicly listed Chinese firms, on corporate tax evasion. We select China because publicly listed Chinese firms are required to disclose detected corporate tax evasion since 2003. After correcting for tax evasion’s partial observability, we find that state-owned enterprises (SOEs) are more likely to evade taxes, their evasion is less likely to be discovered, and, when it is detected, SOEs also pay lower penalties relative to non-SOEs. Our findings refute the common perception that SOEs are less aggressive in tax avoidance than non-SOEs.

Keywords: Tax Avoidance, Tax Evasion, China, Government Ownership

Suggested Citation

Chow, Travis and Ke, Bin and Yuan, Hongqi and Zhang, Yao, Government Ownership and Corporate Tax Evasion: Evidence from China (March 13, 2022). Available at SSRN: https://ssrn.com/abstract=3160421 or http://dx.doi.org/10.2139/ssrn.3160421

Travis Chow (Contact Author)

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong, Pokfulam HK
China

Bin Ke

National University of Singapore ( email )

Mochtar Riady Building, BIZ 1, #07-30
15 Kent Ridge Drive
Singapore, 119245
Singapore
+6566013133 (Phone)

Hongqi Yuan

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

Yao Zhang

Tongji University - Accounting Department ( email )

100 Wudong Road
Shanghai 200433
China

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