The Impact of Institutional Cross-ownership on Corporate Tax Avoidance: Evidence from Chinese Listed Firms

This study investigates the relationship between institutional cross-ownership and corporate tax avoidance in Chinese listed firms. Our findings indicate that the tax avoidance aggressiveness of Chinese listed firms could be significantly motivated by institutional cross-ownership. This finding is robust to endogeneity tests, namely, propensity score matching estimation, two-stage least squares regression, generalised method of moments test, and a falsification concern. Further, this positive relationship between institutional cross-ownership and tax avoidance is more pronounced for listed firms with greater managerial ability and those with higher auditor industry expertise. Finally, such a relationship is more obvious for cross-owners within the same industry, but only significant for independent cross-owners, non-state-owned enterprises and firms within a less competitive industry. All main findings are robust to various robustness tests.