Recent Findings in Economics Described by Researchers from Shanghai Business School (Tracing Tax Transparency: the Effect of Central Bank Digital Currency On Corporate Tax Avoidance): Economics

2025 DEC 15 (NewsRx) -- By a News Reporter-Staff News Editor at NewsRx Policy and Law Daily -- New research on Economics is the subject of a report. According to news reporting originating in Shanghai, People’s Republic of China, by NewsRx journalists, research stated, “Exploiting the pilot of electronic Chinese yuan (e-CNY) as a quasi-exogenous shock, we show that a central bank digital currency (CBDC) helps reduce tax avoidance among firms in pilot cities relative to non-pilot firms. We attribute the results to the enhanced traceability of e-CNY that enables the government to better verify some retail transactions, and corporate e-CNY wallets curtail managerial opportunism by reducing information asymmetry.”

The news reporters obtained a quote from the research from Shanghai Business School, “Consistent with these arguments, we find that treatment firms with retail businesses exhibit lowered tax avoidance. Meanwhile, the e-CNY launch helps curb related-party transactions, negative accruals earnings management, and perquisite consumption among treatment firms. Heterogeneous tests reveal that the attenuation of tax avoidance is stronger among firms with weaker internal and external governance. Consequently, firms that reduce tax avoidance due to e-CNY adoption subsequently have lower stock price crash risks and higher market values. Our study highlights the potential of CBDCs as a novel instrument for tax administration and corporate governance.”

According to the news reporters, the research concluded: “However, it is also essential to prudently utilize the traceability feature of CBDCs to mitigate surveillance concerns.”

This research has been peer-reviewed.

For more information on this research see: Tracing Tax Transparency: the Effect of Central Bank Digital Currency On Corporate Tax Avoidance. Journal of Accounting and Public Policy, 2025;54. Journal of Accounting and Public Policy can be contacted at: Elsevier Science Inc, Ste 800, 230 Park Ave, New York, NY 10169, USA. (Elsevier - www.elsevier.com; Journal of Accounting and Public Policy - http://www.journals.elsevier.com/journal-of-accounting-and-public-policy/)

Our news correspondents report that additional information may be obtained by contacting Kam C. Chan, Shanghai Business School, Res Ctr Finance, Shanghai, People’s Republic of China.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1016/j.jaccpubpol.2025.107377. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

(Our reports deliver fact-based news of research and discoveries from around the world.)