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Tax authority monitoring and corporate information disclosure quality in China

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  • Ye, Yongwei
  • Zeng, Lin
  • Tao, Yunqing
  • Yun, Feng

Abstract

This paper studies the effect of tax enforcement on corporate information disclosure quality by exploiting the enforcement of the “Golden Tax-III” project in China as an exogenous variation in the tax authority monitoring. Our difference-in-differences estimates show that an increase in tax monitoring improves corporate information disclosure quality. This effect is more pronounced in firms with weak external supervision, weak internal governance, and firms located in non-eastern areas, and areas with lower fiscal pressure. Mechanism tests show that tax authority monitoring improves information disclosure quality through tax compliance channels. Our findings document that public enforcement can exert a governance effect on enterprises, especially in developing countries and areas.

Suggested Citation

  • Ye, Yongwei & Zeng, Lin & Tao, Yunqing & Yun, Feng, 2023. "Tax authority monitoring and corporate information disclosure quality in China," International Review of Financial Analysis, Elsevier, vol. 90(C).
    • Handle: RePEc:eee:finana:v:90:y:2023:i:c:s1057521923003885
    DOI: 10.1016/j.irfa.2023.102872
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    2. Li, Yiping & Zheng, Lanxing & Xie, Chang & Fang, Jiming, 2024. "Big data development and enterprise ESG performance: Empirical evidence from China," International Review of Economics & Finance, Elsevier, vol. 93(PB), pages 742-755.
    3. Zhang, Shengpeng & Li, Yaokuang & Liang, Ruixin & He, Yu, 2024. "Does management tone matter in information disclosure? Evidence from IPO online roadshows in the SSE STAR market," International Review of Financial Analysis, Elsevier, vol. 94(C).
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    5. Yushu, Kuang & Zongkeng, Li & Rui, Liang, 2024. "Disclosure of internal control evaluation reports of Chinese enterprises: History, problems and strategies," Finance Research Letters, Elsevier, vol. 66(C).

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    More about this item

    Keywords

    Tax authority monitoring; Corporate information disclosure quality; Tax compliance; Public enforcement;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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