The impact of China’s VAT reform policy on financial performance of listed companies in China’s cultural industry

The cultural industry with innovation, low pollution and low energy consumption may become the next strategic pillar industry in China. The tax reform of ‘Replacing business tax with value-added tax (VAT)’ not only lays a solid foundation for the establishment of green tax system, but also contributes to the enterprise development and performance improvement. This paper aims to study the impact of VAT reform policy on the financial performance of listed companies in the cultural industry. To this end, the PSM-DID method was applied, and natural experiments were made by taking A shares listed companies from 2009 to 2014 as the reform pilot. The research finds that: (1) the VAT reform policy ‘replacing business tax with VAT’ is conducive to improving the financial performance of cultural industry enterprises; (2) the policy has more positive impact on the financial performance of manufacturing cultural enterprises than on non-manufacturing ones; (3) compared with state-owned enterprises, the policy contributes more to the financial performance of private enterprises. This study provides empirical evidence for evaluating the impact of VAT reform policy on the operation of cultural industry enterprises. It has practical significance for improving the VAT system and the financial operation of cultural enterprises.