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Table 11 Cross-sectional tests based on market power and ETCs

From: Does access to credit reduce SMEs’ tax avoidance? Evidence from a regression discontinuity design

  Higher market power Lower market power
(1) (2) (3) (4) (5) (6)
\(BTD\) \(SA\) \(CASH\) \(BTD\) \(SA\) \(CASH\)
Panel A: Cross-sectional tests based on market power
Results based on 2SLS
 \(TRC\) 0.089` 0.374  − 0.876  − 0.335**  − 0.801**  − 0.420**
  (0.112) (0.928) (1.355) (0.144) (0.317) (0.214)
 Sample size 1224 1054 865 1240 1860 2564
Results based on Sharp RDD
 \(SME\) 0.010 0.040  − 0.081  − 0.070***  − 0.180***  − 0.070**
  (0.009) (0.057) (0.049) (0.020) ` (0.045) (0.030)
 Sample size 1264 1249 776 1116 1331 2582
  Higher ETCs Lower ETCs
(1) (2) (3) (4) (5) (6)
\(BTD\) \(SA\) \(CASH\) \(BTD\) \(SA\) \(CASH\)
Panel B: Cross-sectional tests based on ETCs
Results based on 2SLS
 \(TRC\) − 0.262* − 0.668* − 0.538** − 0.165 − 0.331 − 0.433
  (0.148) (0.394) (0.633) (0.125) (0.633) (0.380)
 Sample size 1586 1976 2460 625 828 593
Results based on Sharp RDD       
\(SME\) − 0.040*** − 0.113** − 0.083*** − 0.027 − 0.046 − 0.070
  (0.015) (0.045) (0.031) (0.017) (0.065) (0.047)
Sample size 1712 1912 2328 571 819 668
  1. This table reports RDD results of cross-sectional tests for tax avoidance, financial constraints and cash dependence. Panel A presents cross-sectional tests based on market power. Panel B represents cross-sectional tests based on ETCs. The dependent variables are tax avoidance (\(BTD\)), financial constraints (\(SA\)) and cash dependence (\(CASH\)). Market power is measured as the gross profit margin. ETCs is calculated as entertainment and travel costs scaled by operation revenue. We divide the full sample into two groups respectively based on the medians of market power and ETCs to exercise the cross-sectional tests. \(TRC\) is an indicator variable that is equal to one if the firm's bank loan raise after TRRRCs. \(SME\) is an indicator variable that is equal to one if the firm's operation revenue was below the threshold of operation revenue. The discontinuity estimates are based on local linear regressions. Standard errors are in the parentheses. *, **, and *** represent statistical significance level at the 1%, 5% and 10% levels, respectively