Mixed-ownership structure, non-state-blockholder coalition, and tax avoidance

This study examines the relationship between a coalition of non-state blockholders and corporate tax avoidance in a context in which state and non-state ownership coexist and the ownership structure is concentrated. Our results show that the dominance of non-state blockholders is positively associated with corporate tax avoidance and that the relationship is weakened by the state being the ultimate controller. Further analyses show that the relationship between non-state blockholder dominance and tax avoidance is weakened by the increased number of and greater heterogeneity among non-state blockholders. Moreover, the moderating effect of the state as the ultimate controller is more pronounced when there are fewer layers in the pyramidal state-shareholding structure and when the local government is the ultimate controller. In addition, we find that a tightening of regional tax enforcement efforts and the implementation of a 2007 tax reform weaken this relationship. Altogether, our results suggest that the collective power of non-state blockholder coalitions and the control strength of the state ultimate controller interact to influence corporate tax strategies.