The New Enterprise Income Tax Act was passed by the Chinese government in 2008, which reduced the tax rate from 33% to 25% and applied a tax rate of 15% to high-tech businesses as a preferential tax policy. This shows that high-tech businesses are taxed differently from other businesses. The study aims to analyse how the Chinese government's ownership affects the tax avoidance of high-tech enterprises. The analysis's findings are listed below. First off, high-tech corporations engaged in more tax avoidance than other businesses did before to the 2008 tax rate cut. This means that high-tech companies, with large effect of the tax rate cut, have more incentives to minimize their tax burden in the year immediately preceding the tax rate cut compared to general companies. Second, the higher the Chinese government's ownership ratio, the lower the level of tax avoidance. Third, the higher the ownership is, the higher the tax avoidance behaviour becomes in the year just before the tax rate cut. This study provides policy implications pertaining to the tax avoidance behaviour of companies in the case of tax rate cuts and experimental situations in which a differential tax exists.
This study aims to analyze the trends of Chinese companies' revenue-expense matching level and identify the impacts of the 2008 global financial crisis and the 2015 plunge in the Shanghai index on this level of matching. Since these two events, China has implemented strong regulations in the form of structural changes in financial markets and the application of accounting standards. The analysis results can be summarized as follows: first, the analysis of samples for all firm years showed that the expenses of t-1, t, and t+1 had significant positive effects on current revenue. In particular, as concluded by prior studies, the current (t) expenses had the greatest impact on current revenue. Second, before and after the 2008 financial crisis, this matching level changed, but was not statistically significant. However, prior to the 2008 financial crisis and after the 2015 stock price crash, prior and current expenses showed statistically significant coefficients with regard to current revenues. This study provides accounting policy implications as an analysis of the impact of changes in accounting policies due to macroeconomic events in China on the level of revenue-expense matching. Contribution/Originality:In general, raising the revenue-expense matching level of companies can eliminate information asymmetry between investors and managers. This study provides policy implications that the changes in accounting policies due to macroeconomic events, the 2008 global financial crisis, and the 2015 plunge in the Shanghai index in China affected the level of this matching. Therefore, this study provides empirical evidence that in order to increase the matching level of companies, regulations on the Chinese capital market must be relaxed and the accounting disclosure system of companies must be strictly regulated.
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