An Empirical Study on Effective Tax Rate and CEO Promotion: Evidence from Local SOEs in China
Abstract
:1. Introduction
2. Literature Review and Hypotheses Development
3. Data and Methodology
3.1. Data
3.2. Variable Measurements and Model Specification
3.2.1. Pyramid Layer
3.2.2. Effective Tax Rate
3.2.3. Model Specification
4. Empirical Results
4.1. Descriptive Summary and Correlation Coefficients
4.2. Regression Results
5. Additional Tests
5.1. Robustness Tests
5.2. The Role of Marketization
6. Conclusions
Author Contributions
Acknowledgments
Conflicts of Interest
Appendix A. Variable Definitions
Appendix B. The Importance of Local SOEs
Year | Type | Local SOE | Central SOE | Private Firm |
---|---|---|---|---|
2004 | Number | 700 | 228 | 426 |
Asset (billion dollars) | 392.2 | 332.5 | 202.1 | |
Tax (billion dollars) | 4.0 | 5.6 | 1.0 | |
2005 | Number | 683 | 237 | 431 |
Asset (billion dollars) | 438.1 | 397.8 | 226.8 | |
Tax (billion dollars) | 4.1 | 6.6 | 1.2 | |
2006 | Number | 665 | 262 | 507 |
Asset (billion dollars) | 622.6 | 2502.8 | 335.6 | |
Tax (billion dollars) | 5.4 | 14.6 | 1.8 | |
2007 | Number | 678 | 273 | 597 |
Asset (billion dollars) | 847.5 | 4744.4 | 517.4 | |
Tax (billion dollars) | 8.7 | 39.0 | 3.8 | |
2008 | Number | 668 | 294 | 640 |
Asset (billion dollars) | 1026.5 | 5551.0 | 604.7 | |
Tax (billion dollars) | 6.6 | 23.8 | 2.4 | |
2009 | Number | 661 | 314 | 776 |
Asset (billion dollars) | 1262.6 | 7065.4 | 795.4 | |
Tax (billion dollars) | 8.4 | 33.2 | 5.1 | |
2010 | Number | 681 | 335 | 1089 |
Asset (billion dollars) | 1622.4 | 9852.9 | 1185.1 | |
Tax (billion yuan) | 12.9 | 47.9 | 8.1 |
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Variable | Obs | Mean | Sd | Min | Max |
---|---|---|---|---|---|
Promotion | 3367 | 0.037 | 0.190 | 0 | 1 |
ETR | 3367 | 0.222 | 0.149 | 0 | 0.743 |
Layer | 3367 | 2.259 | 0.644 | 1 | 7 |
ROA | 3367 | 0.038 | 0.048 | −0.182 | 0.192 |
Size | 3367 | 21.744 | 1.056 | 19.375 | 24.505 |
No1share | 3367 | 0.406 | 0.155 | 0.102 | 0.759 |
Dual | 3367 | 0.103 | 0.304 | 0 | 1 |
Percentage | 3367 | 0.355 | 0.049 | 0.222 | 0.556 |
CEOshare | 3367 | 0.008 | 0.045 | 0 | 0.391 |
CEOage | 3367 | 47.793 | 6.095 | 29 | 73 |
CEOtenure | 3367 | 3.534 | 1.908 | 0.920 | 8.750 |
ST | 3367 | 0.042 | 0.201 | 0 | 1 |
Promotion | ETR | Layer | ROA | Size | No1share | Dual | Percentage | CEOshare | CEOage | CEOtenure | ST | |
---|---|---|---|---|---|---|---|---|---|---|---|---|
Promotion | 1 | |||||||||||
ETR | 0.032 * | 1 | ||||||||||
Layer | 0.011 | −0.038 ** | 1 | |||||||||
ROA | −0.017 | −0.020 | −0.010 | 1 | ||||||||
Size | 0.019 | 0.059 *** | −0.037** | 0.251 *** | 1 | |||||||
No1share | 0.012 | −0.002 | −0.024 | 0.167 *** | 0.184 *** | 1 | ||||||
Dual | −0.041 ** | −0.000 | −0.009 | −0.016 | −0.083 *** | −0.067 *** | 1 | |||||
Percentage | −0.004 | −0.033 * | 0.006 | 0.030 * | 0.082 *** | −0.001 | −0.005 | 1 | ||||
CEOshare | −0.001 | −0.022 | −0.024 | 0.097 *** | 0.019 | −0.128 *** | 0.118 *** | −0.012 | 1 | |||
CEOage | 0.009 | −0.016 | 0.027 | 0.065 *** | 0.149 *** | 0.061 *** | 0.075 *** | 0.004 | 0.030 * | 1 | ||
CEOtenure | −0.019 | −0.009 | 0.018 | 0.078 *** | 0.127 *** | −0.148 *** | 0.064 *** | 0.002 | 0.050 *** | 0.194 *** | 1 | |
ST | 0.029 * | −0.213 *** | 0.033* | −0.301 *** | −0.256 *** | −0.070 *** | 0.089 *** | −0.013 | −0.024 | −0.002 | −0.061 *** | 1 |
Promotion | Model 1 | Model 2 | Model 3 |
---|---|---|---|
ROA | −2.132 | −1.862 | −1.982 |
(1.970) | (2.079) | (2.067) | |
Size | 0.089 | 0.088 | 0.099 |
(0.085) | (0.086) | (0.088) | |
No1share | 0.003 | 0.003 | 0.003 |
(0.006) | (0.006) | (0.006) | |
Dual | −1.103 ** | −1.121 ** | −1.116 ** |
(0.473) | (0.479) | (0.481) | |
Percentage | −0.870 | −0.723 | −0.654 |
(1.884) | (1.869) | (1.865) | |
CEOshare | 0.876 | 1.028 | 1.071 |
(1.934) | (1.907) | (1.880) | |
CEOage | 0.009 | 0.009 | 0.010 |
(0.015) | (0.015) | (0.015) | |
CEOtenure | −0.063 | −0.062 | −0.061 |
(0.052) | (0.053) | (0.052) | |
ST | 0.671 | 0.880 | 0.820 |
(0.563) | (0.550) | (0.531) | |
ETR | 1.231 ** | 4.623 ** | |
(0.593) | (2.008) | ||
Layer | 0.418 | ||
(0.257) | |||
Layer*ETR | −1.530 * | ||
(0.922) | |||
Constant | −6.248 *** | −6.468 *** | −7.677 *** |
(2.153) | (2.192) | (2.418) | |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 3351 | 3351 | 3351 |
Pseudo R2 | 0.022 | 0.025 | 0.028 |
Wald Chi2 | 22.08 | 26.71 | 30.94 |
Promotion | Model 4 | Model 5 | Model 6 |
---|---|---|---|
ROA | −1.830 | −1.956 | −1.857 |
(2.084) | (2.073) | (2.081) | |
Size | 0.089 | 0.100 | 0.088 |
(0.086) | (0.088) | (0.087) | |
No1share | 0.004 | 0.004 | 0.003 |
(0.007) | (0.007) | (0.006) | |
Dual | −1.125 ** | −1.119** | −1.121 ** |
(0.478) | (0.480) | (0.479) | |
Percentage | −0.703 | −0.640 | −0.735 |
(1.861) | (1.857) | (1.863) | |
CEOshare | 1.049 | 1.088 | 1.020 |
(1.908) | (1.881) | (1.907) | |
CEOage | 0.009 | 0.010 | 0.009 |
(0.015) | (0.015) | (0.015) | |
CEOtenure | −0.061 | −0.060 | −0.062 |
(0.052) | (0.052) | (0.052) | |
ST | 0.872 | 0.814 | 0.876 |
(0.553) | (0.535) | (0.547) | |
Dividend | −0.002 | −0.001 | |
(0.007) | (0.007) | ||
ETR | 1.254 ** | 4.626 ** | 1.219 * |
(0.592) | (2.009) | (0.678) | |
Layer | 0.416 | ||
(0.256) | |||
Layer*ETR | −1.523 * | ||
(0.915) | |||
Separation | −0.002 | ||
(0.022) | |||
Separation*ETR | 0.003 | ||
(0.073) | |||
Constant | −6.497 *** | −7.695 *** | −6.454 *** |
(2.195) | (2.422) | (2.207) | |
Industry | Yes | Yes | Yes |
Year | Yes | Yes | Yes |
N | 3351 | 3351 | 3351 |
Pseudo R2 | 0.025 | 0.028 | 0.025 |
Wald Chi2 | 26.95 | 30.94 | 26.85 |
Promotion | Model 7 | Model 8 |
---|---|---|
Index ≥ Median | Index < Median | |
ROA | −1.874 | −1.544 |
(3.214) | (3.013) | |
Size | 0.024 | 0.211 * |
(0.141) | (0.122) | |
No1share | −0.003 | 0.012 |
(0.009) | (0.009) | |
Dual | −1.293 * | −0.989 |
(0.779) | (0.652) | |
Percentage | 0.368 | −2.148 |
(2.734) | (2.580) | |
CEOshare | 1.008 | −0.841 |
(2.157) | (3.497) | |
CEOage | 0.021 | −0.000 |
(0.020) | (0.026) | |
CEOtenure | −0.108 | −0.024 |
(0.076) | (0.073) | |
ST | 1.142 | 0.465 |
(0.800) | (0.643) | |
ETR | 3.716 | 6.179 ** |
(2.802) | (2.920) | |
Layer | 0.170 | 0.873 ** |
(0.365) | (0.390) | |
Layer*ETR | −0.906 | −2.567 * |
(1.255) | (1.314) | |
Constant | −17.155 *** | −10.319 *** |
(3.537) | (3.064) | |
Industry | Yes | Yes |
Year | Yes | Yes |
N | 1678 | 1640 |
Pseudo R2 | 0.058 | 0.065 |
Wald Chi2 | 569.16 | 45.07 |
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Share and Cite
Wang, K.; Zhang, H.; Tsai, S.-B.; Jiang, J.; Sun, Y.; Wang, J. An Empirical Study on Effective Tax Rate and CEO Promotion: Evidence from Local SOEs in China. Sustainability 2018, 10, 2007. https://doi.org/10.3390/su10062007
Wang K, Zhang H, Tsai S-B, Jiang J, Sun Y, Wang J. An Empirical Study on Effective Tax Rate and CEO Promotion: Evidence from Local SOEs in China. Sustainability. 2018; 10(6):2007. https://doi.org/10.3390/su10062007
Chicago/Turabian StyleWang, Kai, Haomin Zhang, Sang-Bing Tsai, Jin Jiang, Yun Sun, and Jiangtao Wang. 2018. "An Empirical Study on Effective Tax Rate and CEO Promotion: Evidence from Local SOEs in China" Sustainability 10, no. 6: 2007. https://doi.org/10.3390/su10062007
APA StyleWang, K., Zhang, H., Tsai, S.-B., Jiang, J., Sun, Y., & Wang, J. (2018). An Empirical Study on Effective Tax Rate and CEO Promotion: Evidence from Local SOEs in China. Sustainability, 10(6), 2007. https://doi.org/10.3390/su10062007