Tax Competition, Regional Environment and Inter-regional Capital Flow:An Empirical Research Based on the Perspective of In
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| Title | Tax Competition, Regional Environment and Inter-regional Capital Flow:An Empirical Research Based on the Perspective of In
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| Author | Wang Fengrong and Miao Miao |
| Organization | SHANDONG UNIVERSITY |
| Email | wangfengrong@sdu.edu.cn；tiankong2136@126.com |
| Key Words | Tax Competition; Regional Environment; Inter-regional Capital Flow; Inter-province M&A |
| Abstract | As a way of market allocation of resources, capital flow characterizes the degree of market progress, and is also subject to administrative barriers as well as market segmentation caused by government intervention in the background of Chinese transition economies. This paper aims to investigate the influencing factors and mechanism of inter-regional capital flow from the perspective of tax competition. For a long time, the effect of tax competition on capital flow is a hot issue in public economics and investment theory research. Existing empirical research are mainly concentrated in areas such as capital formation and FDI. The former ignores the directionality of capital flows and the latter is confined to the homogeneity of investment forms. Inter-province M&A is a micro process of inter-regional (cross-border) capital flows, and is a growth path of firms based on location choices as well. Based on the unique micro perspective of inter-province M&A, this paper measures tax burdens and environment scores of 30 provinces using factor analysis, then investigates investment effect and firm growth effect of tax(environment) based on Logistic model using listed domestic companies merging unlisted companies between 2009 and 2011 as samples. It’s been found that inter-regional tax competition affects firm’s inter-province M&A behaviors significantly and then leads to inter-regional capital flows; Firms may not get tax saving benefits by merging firms which locate in a lower tax burden region, while regional environment has gradually become one of the motives for inter-province M&A. These findings are of enlightening revelations to enterprise growth region choices and can help local government correct competitive behavior. |
| Serial Number | WP634 |
| Time | 2014-08-05 |
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