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Political connections, government support and SME tax payments: A note from fixed-effect quantile regression

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  • Minh, Thanh Nguyen
  • Kim, Van Pham Thi
  • Ngoc, Anh Mai

Abstract

Using fixed-effect quantile regression for a panel dataset from 2009 to 2015, this study contributes to the literature by examining for the first time the effect of political connections and government support on tax payment in Vietnam. While statistically positive linkages between government support and tax payment have been observed only at high percentiles, private SMEs with politically connected directors make lower tax payments than SMEs without such managers in all percentiles. The results imply that policymakers need to increase effective measures to reduce the adverse effects of political connections on state revenue.

Suggested Citation

  • Minh, Thanh Nguyen & Kim, Van Pham Thi & Ngoc, Anh Mai, 2021. "Political connections, government support and SME tax payments: A note from fixed-effect quantile regression," Finance Research Letters, Elsevier, vol. 40(C).
    • Handle: RePEc:eee:finlet:v:40:y:2021:i:c:s1544612320315853
    DOI: 10.1016/j.frl.2020.101771
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    References listed on IDEAS

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    Cited by:

    1. Rocca, Maurizio La & Fasano, Francesco & Cappa, Francesco & Neha, Neha, 2022. "The relationship between political connections and firm performance: An empirical analysis in Europe," Finance Research Letters, Elsevier, vol. 49(C).
    2. Saibal Ghosh, 2022. "Financing obstacles for SMEs: the role of politics," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 12(1), pages 329-340, December.
    3. Wang, Litan & You, Kefei, 2022. "The impact of political connections on corporate tax burden: Evidence from the Chinese market," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Huang, Yin-Siang & Lee, Cheng-Few & Lin, Chih-Yung, 2023. "Applications of fixed effect models to managerial risk-taking incentives," The Quarterly Review of Economics and Finance, Elsevier, vol. 92(C), pages 249-261.
    5. Li, (Tony) Wei & Shi, Lina, 2022. "Donation, political connection and credit access: The case of Chinese small and medium enterprises," Finance Research Letters, Elsevier, vol. 46(PA).
    6. Fasano, Francesco & Javier Sánchez-Vidal, F. & La Rocca, Maurizio, 2022. "The role of government policies for Italian firms during the COVID-19 crisis," Finance Research Letters, Elsevier, vol. 50(C).
    7. Francesco Fasano & Maurizio La Rocca & F. Javier Sánchez-Vidal & Maria Josephin Lio & Alfio Cariola, 2024. "How Local Finance and Enforcement Shaped SME Credit Choices before and during the COVID Crisis," IJFS, MDPI, vol. 12(1), pages 1-16, January.

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