Abstract
This paper examines the effect of short selling on corporate tax avoidance. We propose a financial constraint view, that short selling triggers corporate insiders’ incentive to avoid taxes for funding investment opportunities in emerging markets. Employing staggered short-sale deregulation on the Chinese stock market as quasi-exogenous shocks, we find that the deregulation of short-sales reduces firms’ cash effective tax rates and effective tax rates by 13.2% and 8.4%, respectively. This effect is especially prominent for financially constrained firms and non-state-owned firms. These results suggest that tax avoidance helps to generate additional funds and mitigates financial constraints under downward price pressure in emerging markets that have strong government intervention and lax law enforcement.
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嘉宾介绍
Gary Tian is Professor of Finance in the Department of Applied Finance, Macquarie University. He was a former Professor and Directors of HDR and Research in the Department of Finance and founding Director of the Centre of Business Research in China at Deakin Business School. He was also former Professor of Finance and Director of Chinese Commerce Research Centre at Wollongong University.
His research interests focus on corporate finance and governance in Chinese capital markets including political connections, CEO compensation, bank lending and informal finance, investment efficiency and family firm and audit opinions and auditor choice. His published work on Chinese capital markets has appeared in numerous prestigious international journals including Management Science, Journal of Corporate Finance (six papers), Journal of Banking and Finance (five papers), Auditing a Journal of Practice and Theory and European Accounting Review (two papers). Over the last years, he successfully supervised his 20 PhD students.?
He is currently an associate editor for Accounting and Finance journal. He has been board member of Asian finance Association since 2012 and was the Secretary between 2014 and 2016. As one of the chief investigators, he secured the only ARC Discovery Grant on the topic of “the importance of being politically connected” in the field of banking finance and investment in 2015.
