Vat Tax Preferential Policies On The Performance Of Listed Companies In Northeast Influence Empirical Research

In order to enhance the development of the northeast manufacturing listed industry firms, State Administration of Taxation carried out Value-added Tax Preference Policies on September 14th, 2004.Whether this policy has a positive effect on the firms or not is worth studying carefully, 38 northeast manufacturing listed firms are selected as the sample firms.38 listed manufacturing and non-manufacturing firms in other section have been chosen to be compared sample firms.On one hand, event study method is used in this paper to analyze the effects of Value-added Tax Preference Policies announcement on shareholder wealth of northeast manufacturing listed firms, 2004. On the other hand, the total assets divided by fixed assets,the debt divided by tax payable and the net assets divided by after tax profit of 2003,2004 and 2005 years are analyzed in order to validate this policy's effect on the sample firms.We can find that the empirical result shows this policy has a positive effect on stock price of listed northeast firms; the wealth of shareholders is significantly increasing in short period. Because this policy is temporarily applied in northeast manufacturing industry companies and will be carried out in other period, the other listed firms are also influenced and has positive cumulatively abnormal returns. But it is far less than that of northeast manufacturing industry companies. We can also find that the total assets divided by fixed assets,the debt divided by tax payable and the net assets divided by after tax profit don't have obvious changes, the firms are not motivated to increase the fixed assets'amounts and the tax burden is not decreased.From all of above, the paper's conclusion is that Value-added Tax Preference Policies can increase the stock price, especially have significant effect on short term performance, enhance the value of the firms and accelerate the development of companies in northeast section. But in the long run, the firms don't have apparent increasing performance and the policy is not perfect, the government has to improve it.