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Tax preference, financing constraints and enterprise investment efficiency—Experience, of China’s enterprises investment

PloS one, 2022-09, Vol.17 (9), p.e0274336-e0274336 [Peer Reviewed Journal]

COPYRIGHT 2022 Public Library of Science ;2022 Zhai et al. This is an open access article distributed under the terms of the Creative Commons Attribution License: http://creativecommons.org/licenses/by/4.0/ (the “License”), which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;2022 Zhai et al 2022 Zhai et al ;ISSN: 1932-6203 ;EISSN: 1932-6203 ;DOI: 10.1371/journal.pone.0274336

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  • Title:
    Tax preference, financing constraints and enterprise investment efficiency—Experience, of China’s enterprises investment
  • Author: Zhai, Liangliang ; Feng, Yujing ; Li, Fumin ; Zhai, Liping
  • Sadiq, Ali Safaa
  • Subjects: Asymmetry ; Business enterprises ; Capital costs ; Capital markets ; Cash flow ; China ; Depreciation ; Economic aspects ; Economic development ; Efficiency ; Engineering and Technology ; Evaluation ; Financing ; Fiscal policy ; Fixed assets ; Government business enterprises ; Heterogeneity ; Human capital ; Hypotheses ; Industrial development ; Investments ; Manufacturing ; Matching ; People and Places ; Productivity ; R&D ; Research & development ; Science Policy ; Small business ; Social Sciences ; Taxation
  • Is Part Of: PloS one, 2022-09, Vol.17 (9), p.e0274336-e0274336
  • Description: This paper takes the 2014 pilot project of accelerated depreciation of fixed assets as a quasi-natural experiment, and builds a Propensity Score Matching–Difference in Differences (PSM-DID) model based on the data of Chinese listed companies from 2000 to 2019 to test the impact of tax preference on enterprise investment efficiency and its mechanism. The results show that the policy inhibits supported enterprises investment efficiency significantly. Heterogeneity analysis shows that the policy causes greater investment efficiency losses for small and medium-sized enterprises, non-state-owned enterprises and asset-heavy enterprises. The mechanism test found the reason why the policy eased financing constraints but inhibited investment efficiency in short-term. After a variety of robustness tests, the above basic conclusions are still valid. Although the accelerated depreciation policy of fixed assets is conducive to expanding the scale of investment, the incentive effect on investment efficiency is not obvious, and even shows a restraining effect. Given the existence of heterogeneity, the design of the policy should not only distinguish industries, but also pay attention to the differences between different enterprises in the same industry. Strengthening research and development (R&D) innovation and improving the matching mechanism between human capital and fixed investment will help give full play to the incentive effect of this policy. The research in this paper helps to deepen the understanding of the microeconomic effects of tax policy and identify the internal mechanism, which not only enriches the relevant literature, but also provides a reference for the government to better use tax policy to promote the high-quality development of enterprises.
  • Publisher: San Francisco: Public Library of Science
  • Language: English
  • Identifier: ISSN: 1932-6203
    EISSN: 1932-6203
    DOI: 10.1371/journal.pone.0274336
  • Source: Open Access: DOAJ Directory of Open Access Journals
    Public Library of Science (PLoS) Journals Open Access
    Freely Accessible Journals
    Open Access: PubMed Central
    AUTh Library subscriptions: ProQuest Central
    Coronavirus Research Database
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