Tax Management and Financial Sustainability in Chinese High-Tech Enterprises: ARDL Evidence from BATH Firms

Abstract

This study examines the relationship between tax management and financial sustainability in Chinese High and New-Technology Enterprises (HNTEs), focusing on leading BATH firms (Baidu, Alibaba, Tencent, and Huawei). A quantitative approach was adopted using purposive sampling of 55 financial statements from 2008 to 2023. Tax management was measured through the cash effective tax rate (CETR), while financial sustainability was evaluated using three DuPont-based indicators: net profit margin (NPM), asset turnover (AT), and equity multiplier (EM). To capture both short- and long-term dynamics, the Autoregressive Distributed Lag (ARDL) bounds testing approach was applied. The findings confirm the presence of long-run cointegration among the variables and reveal that NPM, AT, and intangible assets (INTGO) exert a significant positive effect on CETR over the long run, whereas amortization plays a notable role in the short run. Beyond financial mechanics, these findings demonstrate that firms with stronger profitability, efficient resource utilization, and innovation capacity are more capable of adopting responsible tax strategies. Such practices reinforce corporate governance, stabilize public revenues, and foster stakeholder trust, thereby linking firm-level performance with societal welfare. This study contributes by positioning tax management as a strategic mechanism through which high-tech enterprises align financial resilience with broader sustainability goals.