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Legal environment and corporate tax avoidance: A geographic discontinuity design based on the Great Wall in China

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  • Gao, Ming
  • Gu, Qiankun
  • He, Shijun
  • Kong, Dongmin

Abstract

This study investigates the long-term impact of the Great Wall established in the Ming-dynasty on corporate tax avoidance. The centralized administrative system in the borderlands on the south side of the Great Wall shaped a formal unified legal environment, while "feudal lordship" system had an obvious influence on the north side, which enables us to examine the legacy impact on firms with a regression discontinuity design. We find significant lower tax avoidance by firms in the region south of the Great Wall relative to firms on the north of it, and this difference is pronounced for non-SOEs.

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  • Gao, Ming & Gu, Qiankun & He, Shijun & Kong, Dongmin, 2023. "Legal environment and corporate tax avoidance: A geographic discontinuity design based on the Great Wall in China," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s1544612323000375
    DOI: 10.1016/j.frl.2023.103663
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    References listed on IDEAS

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    3. 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).
    4. Cheng, Jiangyan & Wei, Hongmao, 2024. "Digital tax collection and corporate job creation: An analysis based on the quasinatural experiment of Golden Tax Phase III," Finance Research Letters, Elsevier, vol. 66(C).

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