A Study On The Impact Of Tax Reduction Policies On Long-term Corporate Investment

In recent years,China’s economy has been entering a period of higher quality growth,and this stage mainly relies on science and technology innovation drive to improve efficiency and quality through power change.Enterprise investment has always been an important basis for economic growth.At the current stage,more attention should be paid to supporting long-term investment in enterprises,strengthening their enthusiasm for upgrading equipment and facilities,improving R&D and innovation,optimizing industrial structure,and promoting high-quality economic development.Among many industrial enterprises,the development level and quality of manufacturing enterprises occupy a pillar position in economic development,but the problems of manufacturing enterprises’ own high resource dependence and low utilization rate,backward and overcapacity,prominent environmental pollution problems,insufficient innovation and outdated equipment and facilities are very prominent,and at the same time,due to the long payback period and high risks of long-term investment,it makes manufacturing enterprises to make Long-term investment and industrial transformation and upgrading have become difficult.Therefore,how to enhance the awareness of sustainable development of manufacturing enterprises,stimulate their long-term investment to promote their high-quality development,and drive the development of other industries and the market economy is an urgent issue to be studied.Thus,this paper focuses on tax and fee reduction policies and long-term corporate investment,and analyzes the mechanism of the investment promotion effect of tax and fee reduction policies.Firstly,the transmission mechanism of policy on long-term investment of enterprises is explained by "open source and cutting expenditure",in which "open source" is the transmission mechanism line of tax and fee reduction policy on investment income of long-term investment decision of enterprises,tax and fee reduction policy→investment income→long-term investment;"cutting expenditure" is the transmission line of tax and fee reduction policy to the capital cost of enterprises’ long-term investment decision.The mechanism line of tax and fee reduction policy→capital cost → long-term investment.Secondly,the roles played by managerial short-termism between the two are also explored by adding the mechanism of managerial short-termism to the analysis,considering the existence of short-termism behavior of managers in manufacturing firms.From the perspective of managerial short-sightedness,when managers have short-sightedness,it will reduce the incentive effect of tax and fee reduction policies on long-term investment and thus act as a disincentive.Therefore,this paper uses the data of A-share listed manufacturing enterprises from2008 to 2021 to test the long-term investment promotion effect of tax and fee reduction policy and its heterogeneity in different dimensions of data classification by controlling for individual effects and time effects,and adds the factors of managerial characteristics into consideration to explore the impact of the existence of managerial short-sightedness on the relationship between the two.It is revealed that: the tax and fee reduction policy has a distinct incentive effect on the long-term investment of companies;long-term investment expenditures of non-state enterprises,enterprises with high governance level and high-end manufacturing enterprises are more sensitive to the reflection of tax and fee reduction policy;managerial myopia plays a suppressive role on the long-term investment promotion effect of tax and fee reduction policy;after adding managerial myopia as a moderating variable to the heterogeneity analysis,all subgroups are consistent with the previous paper except for the subgroup of governance level which is not significant.According to the results of the empirical evidence,we propose countermeasures from both government and enterprise perspectives.: from the government’s point of view,firstly,we have to increase the intensity of tax reduction and fee lowering policy implementation,implement a combination of tax reduction and fee lowering;secondly,we should enhance the synergy of the system,through optimizing the labor supply system,promoting the reform of decentralization and service delivery,and reducing the operation cost of enterprises.From the perspective of enterprises,the first is to improve corporate governance by moderately reducing equity concentration,building a diversified shareholding framework and establishing a sound monitoring mechanism;the second is to strengthen their own construction and curb the occurrence of managerial short-sightedness.