The Impact of Institutional Ownership on Corporate Tax Avoidance in China: An Empirical Test Using Quantile Regression

Using data from Chinese A‐share listed companies from 2007 to 2022, we employ quantile regression to examine the impact of institutional ownership on corporate tax avoidance. The findings demonstrate that institutional ownership significantly reduces extreme short‐term tax avoidance behavior by companies and also influences their long‐term tax avoidance strategies. Moreover, institutional ownership effectively narrows the gap between a company’s effective tax rate and the industry average tax rate, indicating an optimizing effect on corporate tax planning. Additional analysis reveals the dynamic adjustment effect of institutional ownership on corporate tax avoidance strategies. Furthermore, the impact of institutional ownership on corporate tax avoidance significantly diminishes after controlling for the number of institutional investors. These findings contribute to a deeper understanding of the supervisory and governance role of institutional ownership in the operation of listed companies.