Corporate tax burden, financing constraints and total factor productivity of enterprises: evidence from A-share listed companies in China

Abstract

Abstract tax reduction and fee reduction are important measures for China to promote steady economic development and achieve high-quality development. From the perspective of financing constraints, this study uses the data of A-share listed companies in Shanghai and Shenzhen from 2008 to 2019 to analyze the impact of reducing tax burden on total factor productivity of enterprises and its internal financing mechanism under the background of economic downturn. The results show that, on the whole, reducing taxes and fees and reducing the tax burden of enterprises are conducive to improving the total factor productivity of enterprises; Further, the research mechanism shows that reducing the tax burden can reduce financing constraints, increase enterprise cash flow, stimulate enterprise innovation ability, and improve enterprise total factor productivity; The analysis of heterogeneous enterprises shows that the impact of tax reduction and fee reduction on total factor productivity of enterprises is stronger in non state-owned enterprises, enterprises with higher marketization, small and medium-sized enterprises and growing enterprises.