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Corporate governance effects of digital finance: Evidence from corporate tax avoidance in China

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  • Guo, Xingfang
  • Wei, Tao
  • Wang, Aiping
  • Hu, Haifeng

Abstract

This paper tries to uncover the corporate governance effects of digital finance based on the corporate tax avoidance perspective. We find strong evidence that digital finance is negatively associated with corporate tax avoidance. The governance role digital finance plays is primarily mediated through the mechanisms of resource allocation and information governance effects. Further analysis shows that the negative effects of digital finance are more pronounced among higher profitability and non-state-owned firms. Additionally, multiple major shareholders and stronger internal control quality(corporate internal governance) as well as higher institutional investor shareholding and more analyst attention(corporate external governance) can strengthen their negative connection, manifesting the complementarity between digital finance and modern corporate governance mechanisms. Overall, this paper reveals the spillover effects of changes in the financial development environment on corporate tax avoidance strategies. It also contributes to enriching the literature on the corporate governance value of digital finance and the factors influencing corporate tax avoidance.

Suggested Citation

  • Guo, Xingfang & Wei, Tao & Wang, Aiping & Hu, Haifeng, 2024. "Corporate governance effects of digital finance: Evidence from corporate tax avoidance in China," Research in International Business and Finance, Elsevier, vol. 72(PA).
    • Handle: RePEc:eee:riibaf:v:72:y:2024:i:pa:s0275531924003192
    DOI: 10.1016/j.ribaf.2024.102526
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    More about this item

    Keywords

    Digital finance; Corporate tax avoidance; Corporate governance;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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