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Does Monetary Policy Affect Company’s Tax Planning?——Empirical Evidence from Chinese Listed Companies
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TitleDoes Monetary Policy Affect Company’s Tax Planning?——Empirical Evidence from Chinese Listed Companies  
AuthorChen Dong,Fan Rui and Tang Jianxin  
OrganizationEconomics and Management School of Wuhan University  
Key WordsMonetary Policy; Tax Planning; Financing Constraints; Under-investment; Operating Uncertainty 
AbstractTax is a strong power influencing corporate behavior. Monetary policy affects the accounting and financial behavior of enterprise. This paper study the impact of monetary policy on Chinese listed tax planning and its economic consequences, to reveal how the listed companies deal with the adjustment of monetary policy. Based on 2003-2012 A-share listed companies, we found: under tightening monetary policy, enterprises use more aggressive tax planning level. In private companies, non-preferential tax companies and the companies with high operating uncertainties, the degree of tax planning is influenced by tightening monetary policy more obviously. Aggressive tax planning saves cash flows and help to ease the financing constraints for private companies and non-preferential tax companies. Aggressive tax planning also help to ease under-investment for private companies with good investment opportunities under tight monetary policy. Aggressive tax planning helps to reduce financial distress risk for companies with high operating uncertainty. These findings not only expand research on cash supply mechanism under tight monetary policy, promote our understanding on enterprises’ coping strategy, but also enrich research on effect of informal financing mechanism on enterprise development and economic growth. 
Serial NumberWP668 
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