Abstract: Using the data sample of listed companies of China from 2002 to 2011, this paper analyzes the inter-temporal effects of market-orient process on tax shield of enterprise debt with multi-regression approach. The research shows that: first, without considering the effects of marketization, there is a significant effect of debt tax shield on listing companies of China; second, the higher the marketization level of the enterprise location is, the more significant the effect of debt tax shield is; third, the market-orient process helps to reduce the enterprise financial risk from soft budget constraint; fourth, the effects of debt tax shield on listing companies of China are different for industries, with insignificant effects for real estate industries and significant effects for the remaining industries. Therefore, this paper suggests that the government should further promote the reformation of marketization and carry out preferential tax policy with industry differences, in order to advance the debt tax shield effects, reduce the financial risk and develop the specific industries for enterprises.
Keywords: Tax Shield, Marketization Index, Industry Effect
source:Finance & Trade Economics ,No2,2014