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Conference Paper: Does Competition Encourage Unethical Behavior? The Case of Corporate Profit Hiding in China

TitleDoes Competition Encourage Unethical Behavior? The Case of Corporate Profit Hiding in China
Authors
KeywordsCompetition
Firm behavior
Tax evasion
Chinese economy
Issue Date2005
Citation
The First Asia Corporate Governance Conference, Shanghai, China, 2005 How to Cite?
AbstractThis paper investigates whether market competition enhances firms’ incentives to hide profits. We develop a theoretical model of firms’ profit hiding behavior in competitive environments and derive several testable hypotheses. We then test the model using a database that covers more than 20,000 large-and-medium-sized industrial firms in China during the period 1995-2002. Our findings show that firms in more competitive market environments – as well as firms in relatively disadvantageous positions – hide a larger share of their profits. This suggests that policies intended to promote competition should be accompanied by policies aiming at strengthening institutional infrastructure and at leveling playing fields.
Persistent Identifierhttp://hdl.handle.net/10722/114986

 

DC FieldValueLanguage
dc.contributor.authorCai, HB-
dc.contributor.authorLiu, Q-
dc.contributor.authorXiao, G-
dc.date.accessioned2010-09-26T05:24:56Z-
dc.date.available2010-09-26T05:24:56Z-
dc.date.issued2005-
dc.identifier.citationThe First Asia Corporate Governance Conference, Shanghai, China, 2005-
dc.identifier.urihttp://hdl.handle.net/10722/114986-
dc.description.abstractThis paper investigates whether market competition enhances firms’ incentives to hide profits. We develop a theoretical model of firms’ profit hiding behavior in competitive environments and derive several testable hypotheses. We then test the model using a database that covers more than 20,000 large-and-medium-sized industrial firms in China during the period 1995-2002. Our findings show that firms in more competitive market environments – as well as firms in relatively disadvantageous positions – hide a larger share of their profits. This suggests that policies intended to promote competition should be accompanied by policies aiming at strengthening institutional infrastructure and at leveling playing fields.-
dc.languageeng-
dc.relation.ispartofThe First Asia Corporate Governance Conference-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.subjectCompetition-
dc.subjectFirm behavior-
dc.subjectTax evasion-
dc.subjectChinese economy-
dc.titleDoes Competition Encourage Unethical Behavior? The Case of Corporate Profit Hiding in China-
dc.typeConference_Paper-
dc.identifier.emailLiu, Q: qliu@hku.hk-
dc.identifier.emailXiao, G: xiaogeng@hku.hk-
dc.identifier.authorityLiu, Q=rp01078-
dc.identifier.authorityXiao, G=rp02040-
dc.description.naturepreprint-
dc.identifier.hkuros105801-
dc.publisher.placeShanghai, China-

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