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How does export VAT rebates policy affect corporate investment efficiency? Evidence from corporate tax stickiness

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  • Wang, Xinyi
  • Zhu, Ling

Abstract

VAT rebates have gained prominence as a significant tax incentive policy. This study aims to illuminate how adjustments to the export VAT rebate rate influence corporate investment efficiency from the perspective of tax stickiness. The results show that the implementation of export VAT rebates significantly improves corporate investment efficiency, especially for firms experiencing underinvestment. Tests exploring potential channels reveal that raising export tax rebates mitigates corporate tax stickiness, thereby enhancing investment efficiency. Further analysis indicates that the positive effect on investment efficiency is more pronounced for firms with limited access to external financing and for non-high-tech firms. Our findings suggest that adjustments to tax rebates in export markets play a vital role in alleviating tax stickiness and improving investment efficiency.

Suggested Citation

  • Wang, Xinyi & Zhu, Ling, 2023. "How does export VAT rebates policy affect corporate investment efficiency? Evidence from corporate tax stickiness," Pacific-Basin Finance Journal, Elsevier, vol. 82(C).
    • Handle: RePEc:eee:pacfin:v:82:y:2023:i:c:s0927538x23002019
    DOI: 10.1016/j.pacfin.2023.102130
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