Open AccessEnvironmental regulation and corporate tax avoidance—Evidence from China
Author(s) -
Xiaokang Yang,
Junbing Xu,
Minling Zhu,
Yinglong Yang
Publication year - 2022
Publication title -
plos one
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.99
H-Index - 332
ISSN - 1932-6203
DOI - 10.1371/journal.pone.0261037
Subject(s) - business , tax evasion , china , cash , difference in differences , competition (biology) , propensity score matching , matching (statistics) , significant difference , tax avoidance , industrial organization , environmental regulation , public economics , accounting , monetary economics , double taxation , economics , finance , ecology , econometrics , biology , statistics , mathematics , political science , law
In this study, we used a difference-in-difference (DID) approach to analyze the effect of environmental regulation on corporate tax avoidance behavior based on China’s carbon emissions trading pilot policy of 2013. Our findings were as follows: (1) Environmental regulation has led companies to adopt further tax evasion behaviors. Furthermore, the core conclusion was confirmed after a series of robust and endogenous tests, such as parallel trends and PSM-DID (propensity score matching-difference-in-difference). (2) Environmental regulations increase tax avoidance activities by reducing corporate cash flows. (3) The influence of environmental regulation on firm tax evasion is highly pronounced among non-state-owned enterprises, big-scale enterprises, and enterprises with a high degree of industry competition.