Digital Tax Administration and Related-Party Transactions
Description
The sample covers Chinese A-share listed firms from 2008 to 2024. The sample period begins in 2008, when the new Enterprise Income Tax Law took effect and unified the statutory corporate income tax rate for domestic and foreign-invested firms at 25%. Starting after this reform limits contamination from a major concurrent change in tax policy. Although GTP III had been rolled out nationwide by the end of 2016, the extended post-treatment window allows us to examine whether its governance effect persists. From the initial universe of A-share firms, we exclude financial firms, firms designated for special treatment in a given year, observations with leverage above one, and observations with missing values for the regression variables. After these screens, we further require each firm to have at least one valid observation before GTP III implementation in its region and at least one in or after the implementation year. This requirement excludes firms without pre-implementation observations, firms without post-implementation observations, and firms that enter the sample only after their region has implemented GTP III, so that every firm in the sample contributes to both sides of the policy comparison. All continuous variables are winsorized at the 1st and 99th percentiles. The final sample contains 25,602 firm-year observations. Firm-level data come from the China Stock Market & Accounting Research (CSMAR) database, the regional implementation dates of GTP III are hand-collected from State Taxation Administration announcements and news reports, and statutory corporate income tax rates come from the Wind database.