The Impact of Digitalized Tax Administration on Stock Price Crash Risk

Since the 18th National Congress of the Communist Party of China, informatization initiatives have facilitated the stable and rapid transformation of China's tax administration. The "Golden Tax Phase III" project employs modern techniques to ensure the stability and sustainability of national fiscal revenue, progressively advancing the digitalization of tax administration. This study uses data from Shanghai and Shenzhen A-share listed companies between 2008 and 2020. Employing the Difference-in-Differences (DID) approach against the backdrop of the "Golden Tax Phase III" project, we examine the effect of digitalized tax administration on firms' stock price crash risk. The results indicate that digitalized tax administration significantly reduces the risk of corporate stock price crashes. This effect is particularly pronounced among firms with slower digitalization processes and those audited by non-"Big Four" audit firms. The paper enriches the existing literature on the economic consequences of the "Golden Tax Phase III" project and provides new insights for policy-making.