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Empirical Research on China’s Corporate Income Tax and Corporate Capital Structure

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  • Li Wenhong
  • Qiu Kun

Abstract

In 2008, the domestic and foreign corporate income tax systems were unified in China. Based on data of the listed companies in China from 2006 to 2012 and the established model, we find that income tax rates significantly influence the capital structure of listed companies in China, and there is a positive correlation to the asset-liability ratio. When tax rate falls, the listed company will lower financial leverage, and the main method is through increasing its owners equity, rather than to reduce debt.

Suggested Citation

  • Li Wenhong & Qiu Kun, 2015. "Empirical Research on China’s Corporate Income Tax and Corporate Capital Structure," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 4(2), pages 109-114.
    • Handle: RePEc:rss:jnljfe:v4i2p4
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