The heterogeneous relation between firm size and corporate effective tax rates: Evidence from listed companies in China

Abstract

This article attempts to consider the firms pay no taxes and explain there are different levels of effective tax rate across firms. By means of OLS, Tobit, quantile regression, and censored quantile regression methods this article detects the heterogeneous relation between firm size and corporate effective tax rates. The empirical results show that censored quantile regression model is the best method to detect the firms pay no taxes and explain there are different levels of effective tax rate across firms.

Keywords:

• Effective tax rate
• Tax preference
• Political power hypothesis
• Interest group