Tax information and corporate environmental investment

This study investigates the impact of tax information on corporate environmental investment using the staggered implementation of China's Third-Generation Golden Tax Project (CTAIS-3). Employing a difference-in-differences approach on a panel of Chinese public firms from 2007 to 2022, we find that increased tax information transparency significantly reduces corporate environmental investment. The effect is more pronounced in firms with less intense outside monitoring, higher stock synchronicity, greater analyst forecast errors and dispersion, and more opaque financial reporting. Cross-sectional analyses reveal more potent effects in non-state-owned enterprises and non-polluting industries. Our findings remain robust to various econometric specifications and alternative measures. We contribute to the literature on determinants of corporate ESG activities, the impact of tax information, and the mechanisms influencing strategic ESG behaviors. •Enhanced transparency in tax information results in a significant reduction in corporate environmental investment.•A possible underlying mechanism is that increased transparency in tax information reduces information asymmetry.•The effect is more pronounced in non-state-owned enterprises and non-polluting industries.