Research on the Impact of Short-Selling System on Tax Avoidance of Growth Enterprises: Based on the Research of ChiNext and STAR Market

Anya Liu

doi:10.6981/FEM.202609_7(9).0014

Authors

Anya Liu College of Economics and Management, Northeast Foresty University, Harbin, Heilongjiang, China

DOI:

https://doi.org/10.6981/FEM.202609_7(9).0014

Keywords:

Short-Selling Mechanism; Corporate Tax Avoidance; Growth Enterprises; Difference-in-Differences.

Abstract

With the continuous progress of China's capital market reforms, the short-selling system has been introduced in various markets to enhance price discovery and liquidity, strengthen external supervision, and is now gradually being applied to growth enterprises, such as ChiNext and the STAR Market, However, the effect of capital market governance on tax avoidance by high-growth companies has not been studied enough, Based on a sample of companies listed on ChiNext and the STAR Market from 2010 to 2023, this paper takes advantage of the quasi-natural experiment created by the staged introduction of the margin trading program to apply the difference-in-differences method and systematically studies the effect of short-selling on tax avoidance for growth companies. Therefore, the amount of tax evasion will be relatively small, After adding the firms to the margin trading list, their book-tax difference (BTD) has fallen substantially, and this result is consistent with PSM-DID and other indicators for the dependent variable, In different kinds of companies, the disciplinary function of short selling also varies. A company that invests more in research and development will be less eager to lower taxes by avoiding them, Based on the mechanism test, we found that the financing constraint transmits the effect of short-selling on corporate tax decisions, Increase financing pressure on the company and raise the tax-avoidance cost; thus, it is less attractive for short-selling. Based on the previous studies of the economic effects of short-selling and corporate tax avoidance, we present some empirical data and policy suggestions here to strengthen capital market regulation, build a joint regulatory mechanism with the tax authorities, and introduce differentiated regulatory policies.

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