Banking Deregulation and Corporate Tax Avoidance
China Journal of Accounting Research, Forthcoming
36 Pages Posted: 28 Sep 2016 Last revised: 9 Oct 2016
Date Written: September 27, 2016
Abstract
We investigate whether tax avoidance substitutes for external financing. We exploit interstate banking deregulation as a quasi-external shock to examine whether firms engage in less tax avoidance after banking deregulation, because of cheaper and easier access to credit from banks. We find no empirical evidence to support this substitutive relation, even for firms with higher financial constraints or firms with higher external financing dependence.
Keywords: Tax avoidance, interstate banking deregulation, external financing
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