Big data in tax enforcement and corporate risk-taking: Evidence from China

This study uses the “Golden Tax Project III” as a quasi-natural experiment and employs a difference-in-differences (DID) model to examine how big data in tax enforcement (BDTE) affects corporate risk-taking. Based on data from China's A-share non-financial companies between 2008 and 2022, we find that BDTE enhances corporate risk-taking. Mechanism analyses indicate that BDTE exerts both a “bridge effect” and a “governance effect,” which enhance corporate information transparency, curb earnings management, and lower agency costs, thereby fostering greater risk-taking. Further analysis reveals that the two mechanisms operate in a complementary manner, jointly reinforcing the impact of BDTE on corporate risk-taking. Heterogeneity tests indicate that the impact of BDTE on enhancing risk-taking is more pronounced in non-state-owned enterprises than in state-owned ones. Moreover, market competition, the legal environment, and institutional holdings tend to moderate the influence of BDTE on corporate risk-taking. Our findings establish a link between BDTE and corporate risk-taking, offering valuable insights for both companies and policymakers in shaping investment strategies.