Impact of replacement of business tax by VAT on cash-cash flow sensitivity basing on lifecycle
Enterprise lifecycle leads to different characteristics of different stages. Which stage of lifecycle benefit more from the replacement of business tax by VAT is essential to the research of policy effect on enterprises? This paper studies the impact of replacement of business tax by VAT on cash-cash flow sensitivity so as to discover the leading effect of the reform. The results show that the impact of replacement of business tax by VAT on cash-cash flow sensitivity is obvious in growing period enterprises, less obvious in maturity period enterprises, and has nothing to do with recession period enterprises. The effects on growing enterprises can contribution to the development of growing enterprises and rational allocation of resources, which can finally promote supply-side reform.
Index terms - Replacement of business tax by VAT; Enterprise lifecycle; Cash-cash flow sensitivity