Abstract: Existing research on corporate tax avoidance has largely overlooked the critical dimension of interactive effects among peer firms within the same industry. Using panel data from Chinese A-share listed companies from 2008 to 2020, this study systematically examines the correlation of corporate tax avoidance behaviors within industry groups. The findings reveal a significant peer effect in tax avoidance behavior among listed companies: for every 1 percentage point increase in the level of tax avoidance by peer firms, the target firm’s tax avoidance level rises by approximately 0.2 percentage points. Further analysis indicates that this peer effect in tax avoidance is attenuated when firms exhibit a stronger nationalist cultural orientation, operate in regions with higher tax enforcement intensity, face lower economic policy uncertainty, and receive positive media coverage. Additionally, firms tend to imitate industry-leading peers when making tax avoidance decisions, and the peer effect is significantly stronger for private enterprises than for state-owned enterprises. Notably, the spillover effect of peer tax avoidance behavior ultimately leads to a decline in the target firm’s value. This study not only expands the theoretical explanation of tax avoidance behavior from the perspective of inter-firm interactions, but also provides important insights for regulatory authorities to improve the tax governance policies.

Key words: tax avoidance, peer effect, Golden Tax Project Phase III, tax enforcement