The Impact of Institutional Cross‐ownership on Corporate Tax Avoidance: Evidence from Chinese Listed Firms

This study investigates the relationship between institutional cross‐ownership and corporate tax avoidance in Chinese listed firms. Our findings indicate that the tax avoidance aggressiveness of Chinese listed firms could be significantly motivated by institutional cross‐ownership. This finding is robust to endogeneity tests, namely, propensity score matching estimation, two‐stage least squares regression, generalised method of moments test, and a falsification concern. Further, this positive relationship between institutional cross‐ownership and tax avoidance is more pronounced for listed firms with greater managerial ability and those with higher auditor industry expertise. Finally, such a relationship is more obvious for cross‐owners within the same industry, but only significant for independent cross‐owners, non‐state‐owned enterprises and firms within a less competitive industry. All main findings are robust to various robustness tests.