Propensity score matching (PSM) analysis
| ATT (T-Stat.) | Treatment firms (mean) | Control firms (mean) | Treated: control (No. Of obs.) | |
|---|---|---|---|---|
| Panel A average treatment effect on the treated (ATT) | ||||
| Dependent variable = ETR1 | ||||
| 1.33%**(2.10) | 18.43% | 19.76% | 1,632: 1,643 | |
| ATT (T-Stat.) | Treatment firms (mean) | Control firms (mean) | Treated: control (No. Of obs.) | |
|---|---|---|---|---|
| Dependent variable | ||||
| 1.33%**(2.10) | 18.43% | 19.76% | 1,632: 1,643 | |
| Dependent variable = ETR1 | ||||
|---|---|---|---|---|
| (1) | (2) | (3) | (4) | |
| Panel B regressions based on the matched sample | ||||
| Financial_D | −0.015** | |||
| (−2.215) | ||||
| Financial_Ratio | −0.067*** | |||
| (−2.798) | ||||
| RegulatoryFinancial | −0.009 | |||
| (−0.399) | ||||
| NonregulatoryFinancial | −0.020*** | |||
| (−2.914) | ||||
| RegulatoryFinancial_Ratio | 0.027 | |||
| (0.218) | ||||
| NonregulatoryFinancial_Ratio | −0.071*** | |||
| (−2.603) | ||||
| SOE | 0.015 | 0.016 | 0.015 | 0.016 |
| (1.433) | (1.451) | (1.407) | (1.480) | |
| Size | 0.009*** | 0.009** | 0.009*** | 0.009** |
| (2.709) | (2.520) | (2.720) | (2.540) | |
| Age | −0.008* | −0.007* | −0.008* | −0.008* |
| (−1.900) | (−1.699) | (−1.839) | (−1.797) | |
| Tangibility | −0.004 | −0.004 | −0.006 | −0.005 |
| (−0.087) | (−0.102) | (−0.143) | (−0.115) | |
| Lev | 0.073*** | 0.073*** | 0.073*** | 0.073*** |
| (3.045) | (3.055) | (3.051) | (3.049) | |
| RD | −0.763*** | −0.797*** | −0.760*** | −0.782*** |
| (−3.573) | (−3.702) | (−3.559) | (−3.640) | |
| ROA | 0.255*** | 0.258*** | 0.255*** | 0.258*** |
| (3.930) | (3.975) | (3.928) | (3.980) | |
| Growth | 0.016*** | 0.016*** | 0.017*** | 0.016*** |
| (2.703) | (2.685) | (2.744) | (2.670) | |
| Duality | 0.003 | 0.003 | 0.002 | 0.004 |
| (0.349) | (0.431) | (0.303) | (0.455) | |
| Independence | 0.002 | 0.001 | 0.004 | 0.001 |
| (0.026) | (0.023) | (0.063) | (0.024) | |
| Female | 0.069* | 0.071* | 0.068* | 0.069* |
| (1.890) | (1.930) | (1.862) | (1.893) | |
| Loss | −0.008 | −0.008 | −0.009 | −0.008 |
| (−0.402) | (−0.397) | (−0.418) | (−0.390) | |
| TotalAccruals | 0.008 | 0.007 | 0.006 | 0.006 |
| (0.160) | (0.158) | (0.136) | (0.134) | |
| TMT_Age | −0.057 | −0.059 | −0.053 | −0.057 |
| (−1.176) | (−1.206) | (−1.091) | (−1.176) | |
| TMT_Foreign | 0.053 | 0.056 | 0.053 | 0.058 |
| (1.339) | (1.432) | (1.339) | (1.454) | |
| TMT_Academic | −0.008 | −0.008 | −0.010 | −0.009 |
| (−0.345) | (−0.314) | (−0.427) | (−0.371) | |
| _cons | 0.015 | 0.033 | 0.001 | 0.026 |
| (0.076) | (0.166) | (0.005) | (0.130) | |
| Year fixed effects? | Yes | Yes | Yes | Yes |
| Industry fixed effects? | Yes | Yes | Yes | Yes |
| Province fixed effects? | Yes | Yes | Yes | Yes |
| SEs. Clustered at | Firm, Year | Firm, Year | Firm, Year | Firm, Year |
| Adj. R-square | 0.092 | 0.093 | 0.093 | 0.092 |
| Dependent variable | ||||
|---|---|---|---|---|
| (1) | (2) | (3) | (4) | |
| −0.015** | ||||
| (−2.215) | ||||
| −0.067*** | ||||
| (−2.798) | ||||
| −0.009 | ||||
| (−0.399) | ||||
| −0.020*** | ||||
| (−2.914) | ||||
| 0.027 | ||||
| (0.218) | ||||
| −0.071*** | ||||
| (−2.603) | ||||
| 0.015 | 0.016 | 0.015 | 0.016 | |
| (1.433) | (1.451) | (1.407) | (1.480) | |
| 0.009*** | 0.009** | 0.009*** | 0.009** | |
| (2.709) | (2.520) | (2.720) | (2.540) | |
| −0.008* | −0.007* | −0.008* | −0.008* | |
| (−1.900) | (−1.699) | (−1.839) | (−1.797) | |
| −0.004 | −0.004 | −0.006 | −0.005 | |
| (−0.087) | (−0.102) | (−0.143) | (−0.115) | |
| 0.073*** | 0.073*** | 0.073*** | 0.073*** | |
| (3.045) | (3.055) | (3.051) | (3.049) | |
| −0.763*** | −0.797*** | −0.760*** | −0.782*** | |
| (−3.573) | (−3.702) | (−3.559) | (−3.640) | |
| 0.255*** | 0.258*** | 0.255*** | 0.258*** | |
| (3.930) | (3.975) | (3.928) | (3.980) | |
| 0.016*** | 0.016*** | 0.017*** | 0.016*** | |
| (2.703) | (2.685) | (2.744) | (2.670) | |
| 0.003 | 0.003 | 0.002 | 0.004 | |
| (0.349) | (0.431) | (0.303) | (0.455) | |
| 0.002 | 0.001 | 0.004 | 0.001 | |
| (0.026) | (0.023) | (0.063) | (0.024) | |
| 0.069* | 0.071* | 0.068* | 0.069* | |
| (1.890) | (1.930) | (1.862) | (1.893) | |
| −0.008 | −0.008 | −0.009 | −0.008 | |
| (−0.402) | (−0.397) | (−0.418) | (−0.390) | |
| 0.008 | 0.007 | 0.006 | 0.006 | |
| (0.160) | (0.158) | (0.136) | (0.134) | |
| −0.057 | −0.059 | −0.053 | −0.057 | |
| (−1.176) | (−1.206) | (−1.091) | (−1.176) | |
| 0.053 | 0.056 | 0.053 | 0.058 | |
| (1.339) | (1.432) | (1.339) | (1.454) | |
| −0.008 | −0.008 | −0.010 | −0.009 | |
| (−0.345) | (−0.314) | (−0.427) | (−0.371) | |
| 0.015 | 0.033 | 0.001 | 0.026 | |
| (0.076) | (0.166) | (0.005) | (0.130) | |
| Yes | Yes | Yes | Yes | |
| Yes | Yes | Yes | Yes | |
| Yes | Yes | Yes | Yes | |
| Firm, Year | Firm, Year | Firm, Year | Firm, Year | |
| 0.092 | 0.093 | 0.093 | 0.092 | |
Note(s): This table reports the results of a PSM routine for treatment firms and non-treatment firms during the sample period. Panel A reports the ATT, which captures the systematic difference in effective tax rates between the treatment firms and the control firms. Panel B presents the regression results for both H1 and H2, based on the re-estimation of Eq. (1) using the matched sample. All independent variables are lagged by one year except for Growth and Loss. Detailed variable definitions can be found in Table A1 of the Appendix section. ***, **, and * denote significance at the 1%, 5%, and 10% levels, respectively