Tax incentives and corporate internationalization performance: evidence from China’s accelerated depreciation policy

ABSTRACT

Using data of China’s listed companies from 2010 to 2018, we investigate the effects of China’s accelerated depreciation (CACD) policy on corporate internationalization performance. The results show that CACD policy increases corporate incomes in foreign markets by 16.15% through the market expansion channel and the innovation incentive channel. The policy effect is more pronounced for firms with better corporate governance, more serious financial constraints, and weaker financial risks.

KEYWORDS:

• Tax incentive
• internationalization performance
• market expansion
• accelerated depreciation

JEL CLASSIFICATION:

• F23
• H25

Acknowledgement

We thank the advice provided by Ying Ge (Zhejiang University), Xiao Hu (Southwestern University of Finance and Economics), the editor and two anonymous referees.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Furthermore, we make another three robustness checks including placebo test, Goodman-Bacon decomposition and other policies’ effects exclusion. The results indicate the baseline estimation is stable and convinced. However, we don’t report these results in the manuscript body because of the space constraints.

Additional information

Funding

The work was supported by the National Natural Science Foundation of China [#101302-N11502]; Zhejiang Provincial Soft Science Research Key Program [2022C25035]