Determinants of effective tax rates for firms listed on Chinese stock market: Panel models with two-sided censors


  • Yong-Ching Chiou Department of Insurance and Finance , National Taichung University of Science and Technology, Taiwan.
  • Yao-Chih Hsieh Department of Public Finance, Feng Chia University, Taiwan.
  • Wenyi Lin Graduate Institute of Financial and Economic Law, Feng Chia University, Taiwan.



Effective tax rate, Political power (cost) hypothesis, Tax preference, Two-sided censoring.


This paper is to investigate the determinants effective tax rate for the firms listed on China’s stock markets. The panel data consists of 481 firms from 2007 to 2009 as our empirical data. In order to illustrate a country’s tax policies on firms’ real tax burdens, the dependent variable, ETR, is left-censored at 0 and right-censored at 1, the estimation for panel data model with two-sided censoring suggested by Alan, Honor´e, and Leth-Petersen (2014) is implemented in this paper. There are two important findings are obtained: first, this model can add more observations especially the observations with tax preferences. Second, theories suggest that ETR reflects outcomes of tax preference and this paper is the first time to consider the effective tax rates set between 0 and 1 and this range is more meaningful for the ETRs. 


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