Study On Heterogeneity Impact Of Accelerated Depreciation Policy On Investment Behavior

It is of great significance to promote traditional industries to increase investment more effectively,and stimulate the enthusiasm of enterprises for equipment upgrading.It can contribute to upgrading the industrial structure and achieve high-quality development.In recent years,our government has introduced a series of accelerated depreciation policies,and its scale and intensity have constantly expanded since 2014.Therefore,evaluating the effect of accelerated depreciation policies on investment,especially in its heterogeneity,is valuable.As we all know,the Ministry of Finance and State Administration of Taxation issued Notice on improving the enterprise income tax policy on accelerated depreciation of fixed assets in October 2014 and in September 2015 separately.So taking it as the research background,this paper studies the effect of the accelerated depreciation policy on investment and how it varies across firms.The paper uses the principle of fixed assets depreciation tax deduction and capital user cost model to study the mechanism which the accelerated depreciation policy works.Then the paper uses a difference-in-differences methodology to study the effect of the policy on investment.Data of the A-share listed enterprises from 2010 to 2017 is selected as the research sample,but the financial industry,software,and information service industries are excluded.The first empirical finding is that accelerated depreciation policy has a substantial effect on investment,especially for equipment.But it has less impact on buildings.In order to verify that,this paper performs a parallel trend test and a litany of robustness tests.Considering that the effect of the policy varies with investment willingness,investment capacity,and taxable status of enterprises,this paper analyzes the heterogeneity from three aspects:life cycle,financing constraint and tax payment.The conclusions are as follows:firstly,the policy can promote investment for enterprises in growth or recession period,but the effect for enterprises in mature period is not significant;secondly,the policy only can promote investment for enterprises with higher financing constraints;thirdly,the state of loss or tax avoidance behavior of enterprises significantly inhibits the effect of accelerated depreciation policy.Furthermore,this paper carries out further study,which verifies the "capital deepening effect" of accelerated depreciation policy.Basing on the conclusions,this paper puts forward suggestions for further improving the accelerated depreciation policy.The government should increase the speed of depreciation preferences to play the role of policy promotion more effectively,such as adding the first year of special depreciation or special depreciation period regulations,and the government should explore differentiated policy provisions,so that enterprises with different characteristics can enjoy preferential policies.Main contributions of the paper are as follows:on the one hand,the paper studies heterogeneity with corporate characteristics that are closely related to investment decisions,and studies the heterogeneity of the effect from the perspective of life cycle for the fisrt time;on the other hand,the paper expands the study fields that it explores the "capital deepening effect" of accelerated depreciation policies.