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R&D manipulation can be understood as firms conducting R&D activities for strategic or opportunistic purposes rather than primarily for technological advancement. This paper examines the impact of R&D manipulation on corporate tax avoidance behaviour using the sample of Chinese A-share listed companies in Shanghai and Shenzhen from 2008 to 2022. The results demonstrate a positive association between R&D manipulation and corporate tax avoidance, which suggests the tax avoidance motivation of corporate R&D manipulation. Cross-sectional tests indicate that the positive relationship between R&D manipulation and corporate tax avoidance is more significant in non-meeting-earnings-benchmarks firms and non-state-owned firms. Our main results are rigorously tested for heterogeneity in further analysis.
Shi et al. (Thu,) studied this question.