Tax Distortion And Governance Strategic Choice Of Zombie Firms In China

Under the new normal economy,the government's work focuses on cleaning up of zombie firms,implementing structural tax cuts and guiding enterprises to continue innovation.Clarifying the effect of zombie firms' tax distortion is conducive to properly handle these zombie firms,achieve tax equity,stimulate the economic vitality of enterprises,and promote economic transformation and upgrading.This paper focuses on the measurement of enterprise micro-tax burden,uses FN-CHK method to measure zombie firms in China Industrial Enterprise Database from 1998 to 2013,and empirically tests the tax distortion of zombie firms by fixed-effect model.The main conclusions of this paper are as following.(a)The provincial and municipal data prove zombie firms distort tax burden of non-zombie firms: the proportion of zombie firms increases the tax burden level of non-zombie firms significantly.Moreover,the individual characteristics of enterprises and the macroeconomic environment of enterprises are important factors affecting the tax burden of enterprises: scale and profitability are negatively related to enterprise tax burden,but inventory intensity is positively correlated with the tax burden.In addition,the impact of economic development level and financial pressure on corporate tax burden is uncertain because of limited research sample.(b)The regional financial pressure will aggravate the tax distortions of zombie firms.The greater the financial pressure,the stronger the tax distortions of zombie firms.(c)The negative impact of zombie firms' tax distortions is widespread: The zombie enterprises in province,city and other cities will distort the tax burden of local non-zombie firms and show the cross-market spillover effect on private enterprises.(d)The tax distortions to local non-zombie firms is affected by the nature of the enterprises' ownership.Compared to state-owned enterprises and private enterprises,non-state-owned enterprises,the tax distortion borne by private enterprises has more economic significance.Based on these empirical results mentioned above,the paper puts forward the governance strategy from three aspects: improving the exit mechanism of zombie firms,optimizing the tax management environment of private enterprises and strict ly controlling the preferential policies of local autonomy.