Share price reaction on corporate tax reforms in China
This paper elaborates on the changes in corporate taxation in China to accommodate the government's fiscal expenditure, specifically, the study highlights the effect of major corporate tax reforms in China on firms' share price. The result shows that the price reactions are significantly p...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Faculty of Economics and Management, Universiti Putra Malaysia
2017
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| Online Access: | http://psasir.upm.edu.my/id/eprint/65374/ http://psasir.upm.edu.my/id/eprint/65374/1/%2819%29%20IJEM%20%28S3%29%202017%20R2%20Corporate%20tax%20reforms%20and%20share%20price%20effect%20on%20China.pdf |
| _version_ | 1848855265784365056 |
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| author | Selamat, Aslam Izah Syed Mohamed, Mohamed Ariff Ramadili Mohd, Shamsher Mohamad |
| author_facet | Selamat, Aslam Izah Syed Mohamed, Mohamed Ariff Ramadili Mohd, Shamsher Mohamad |
| author_sort | Selamat, Aslam Izah |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper elaborates on the changes in corporate taxation in China to accommodate the government's fiscal expenditure, specifically, the study highlights the effect of major corporate tax reforms in China on firms' share price. The result shows that the price reactions are significantly positive/ negative to corporate tax rate decreases/increases, relatively related to different taxpayer categories. This finding is not in line with the theory of Modigliani and Miller (1958; 1963), which may be due to a larger tax benefit being gained from the tax cut. The correlations between price changes and three firm factors (risk, firm size, debt-equity ratio) among the groups are statistically significant, further validating the result. These findings add to the growing literature seeking to understand China's capital market behaviour and also serves as a test of tax effect involving corporate tax. |
| first_indexed | 2025-11-15T11:23:01Z |
| format | Article |
| id | upm-65374 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T11:23:01Z |
| publishDate | 2017 |
| publisher | Faculty of Economics and Management, Universiti Putra Malaysia |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-653742018-10-05T09:53:44Z http://psasir.upm.edu.my/id/eprint/65374/ Share price reaction on corporate tax reforms in China Selamat, Aslam Izah Syed Mohamed, Mohamed Ariff Ramadili Mohd, Shamsher Mohamad This paper elaborates on the changes in corporate taxation in China to accommodate the government's fiscal expenditure, specifically, the study highlights the effect of major corporate tax reforms in China on firms' share price. The result shows that the price reactions are significantly positive/ negative to corporate tax rate decreases/increases, relatively related to different taxpayer categories. This finding is not in line with the theory of Modigliani and Miller (1958; 1963), which may be due to a larger tax benefit being gained from the tax cut. The correlations between price changes and three firm factors (risk, firm size, debt-equity ratio) among the groups are statistically significant, further validating the result. These findings add to the growing literature seeking to understand China's capital market behaviour and also serves as a test of tax effect involving corporate tax. Faculty of Economics and Management, Universiti Putra Malaysia 2017 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/65374/1/%2819%29%20IJEM%20%28S3%29%202017%20R2%20Corporate%20tax%20reforms%20and%20share%20price%20effect%20on%20China.pdf Selamat, Aslam Izah and Syed Mohamed, Mohamed Ariff and Ramadili Mohd, Shamsher Mohamad (2017) Share price reaction on corporate tax reforms in China. International Journal of Economics and Management, 11 (S3). pp. 921-938. ISSN 1823-836X; ESSN: 2600-9390 http://www.ijem.upm.edu.my/vol11noS3/(19)%20IJEM%20(S3)%202017%20R2%20Corporate%20tax%20reforms%20and%20share%20price%20effect%20on%20China.pdf |
| spellingShingle | Selamat, Aslam Izah Syed Mohamed, Mohamed Ariff Ramadili Mohd, Shamsher Mohamad Share price reaction on corporate tax reforms in China |
| title | Share price reaction on corporate tax reforms in China |
| title_full | Share price reaction on corporate tax reforms in China |
| title_fullStr | Share price reaction on corporate tax reforms in China |
| title_full_unstemmed | Share price reaction on corporate tax reforms in China |
| title_short | Share price reaction on corporate tax reforms in China |
| title_sort | share price reaction on corporate tax reforms in china |
| url | http://psasir.upm.edu.my/id/eprint/65374/ http://psasir.upm.edu.my/id/eprint/65374/ http://psasir.upm.edu.my/id/eprint/65374/1/%2819%29%20IJEM%20%28S3%29%202017%20R2%20Corporate%20tax%20reforms%20and%20share%20price%20effect%20on%20China.pdf |