IPO suspension, financing uncertainty and corporate tax avoidance
The acquisition of external financing is an important factor affecting the development of enterprises and even the economic growth of a country. However, changes in the external environment often expose enterprises to uncertainties in obtaining external financing. Taking China’s initial public offer...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
| Published: |
Elsevier
2023-12-01
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| Series: | China Journal of Accounting Research |
| Subjects: | |
| Online Access: | http://www.sciencedirect.com/science/article/pii/S1755309123000394 |
| _version_ | 1797454394474627072 |
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| author | Fei Lu Songyan Yang |
| author_facet | Fei Lu Songyan Yang |
| author_sort | Fei Lu |
| collection | DOAJ |
| description | The acquisition of external financing is an important factor affecting the development of enterprises and even the economic growth of a country. However, changes in the external environment often expose enterprises to uncertainties in obtaining external financing. Taking China’s initial public offering (IPO) suspension policy as a setting, this paper examines the impact of the associated external financing uncertainty on firms. The empirical results show that firms that are unable to secure planned financing due to the IPO suspension policy engage in greater tax avoidance activities than successful IPOs during the IPO suspension period; this phenomenon is mainly concentrated in firms that are not state-owned, have no venture capital or private equity backing, have lower debt servicing capacity and have lower tax avoidance risk. Moreover, the tax avoidance activities of enterprises positively influence their fixed asset investment and innovation investment during the IPO suspension period. Evidence based on IPO price performance indicates that investors respond positively to firms’ tax avoidance practices during IPO suspensions. |
| first_indexed | 2024-03-09T15:36:36Z |
| format | Article |
| id | doaj.art-fdd8a14d09d74b1fac86d561734051c2 |
| institution | Directory Open Access Journal |
| issn | 1755-3091 |
| language | English |
| last_indexed | 2024-03-09T15:36:36Z |
| publishDate | 2023-12-01 |
| publisher | Elsevier |
| record_format | Article |
| series | China Journal of Accounting Research |
| spelling | doaj.art-fdd8a14d09d74b1fac86d561734051c22023-11-26T05:12:15ZengElsevierChina Journal of Accounting Research1755-30912023-12-01164100329IPO suspension, financing uncertainty and corporate tax avoidanceFei Lu0Songyan Yang1Dongbei University of Finance and Economics, Dalian, ChinaXiamen University, Xiamen, China; Corresponding author.The acquisition of external financing is an important factor affecting the development of enterprises and even the economic growth of a country. However, changes in the external environment often expose enterprises to uncertainties in obtaining external financing. Taking China’s initial public offering (IPO) suspension policy as a setting, this paper examines the impact of the associated external financing uncertainty on firms. The empirical results show that firms that are unable to secure planned financing due to the IPO suspension policy engage in greater tax avoidance activities than successful IPOs during the IPO suspension period; this phenomenon is mainly concentrated in firms that are not state-owned, have no venture capital or private equity backing, have lower debt servicing capacity and have lower tax avoidance risk. Moreover, the tax avoidance activities of enterprises positively influence their fixed asset investment and innovation investment during the IPO suspension period. Evidence based on IPO price performance indicates that investors respond positively to firms’ tax avoidance practices during IPO suspensions.http://www.sciencedirect.com/science/article/pii/S1755309123000394G32G38H26 |
| spellingShingle | Fei Lu Songyan Yang IPO suspension, financing uncertainty and corporate tax avoidance China Journal of Accounting Research G32 G38 H26 |
| title | IPO suspension, financing uncertainty and corporate tax avoidance |
| title_full | IPO suspension, financing uncertainty and corporate tax avoidance |
| title_fullStr | IPO suspension, financing uncertainty and corporate tax avoidance |
| title_full_unstemmed | IPO suspension, financing uncertainty and corporate tax avoidance |
| title_short | IPO suspension, financing uncertainty and corporate tax avoidance |
| title_sort | ipo suspension financing uncertainty and corporate tax avoidance |
| topic | G32 G38 H26 |
| url | http://www.sciencedirect.com/science/article/pii/S1755309123000394 |
| work_keys_str_mv | AT feilu iposuspensionfinancinguncertaintyandcorporatetaxavoidance AT songyanyang iposuspensionfinancinguncertaintyandcorporatetaxavoidance |