Institutional Environment,Mixed Ownership And Corporate Tax Avoidance

At this stage,our country’s market system,legal system,property rights protection and other aspects have not been perfected,and the development of enterprises is facing many constraints.How to reform the existing system to promote the healthy development of the market environment and the enterprise itself is a topic that needs to be discussed urgently.In the report "Decision of the Central Committee of the Communist Party of China on Several Major Issues Concerning Comprehensively Deepening Reform" adopted at the Third Plenary Session of the 18th CPC Central Committee,it was proposed to "actively develop a mixed-ownership economy","the mixed-ownership economy with cross-shareholding and mutual integration of state-owned capital,collective capital,and non-public capital is an important form of realization of the basic economic system." The report of the 19th National Congress of the Communist Party of China emphasized the importance of developing mixed ownership once again.As a result,the issue of enterprise mixed ownership reform has become the focus of the current economic system reform and corporate governance.The core essence of mixed ownership is the mutual participation of capital of various ownerships.That is,state-owned enterprises allow non-state-owned capital to participate in shares,while non-state-owned enterprises allow state-owned capital to participate in shares.This is beneficial for different capitals to learn from each other’s strengths and balance each other,thereby improving the level of corporate governance and improving the efficiency and effectiveness of business operations.Most of the existing studies can confirm the positive effects of mixed ownership.For example,mixed ownership can promote the innovation of state-owned enterprises,reduce the policy burden of state-owned enterprises,improve the level of internal control of enterprises,and reduce the excess and redundancy of state-owned enterprises,etc.However,studies on the effectiveness of mixed-ownership reform mostly focus on state-owned enterprises.The state-owned capital’s shareholding in non-state-owned enterprises is also an important part of the mixed ownership reform,but the existing research on the mixed-ownership structure of non-state-owned enterprises is relatively rare.Taxation is a compulsory levy imposed by the state on the profits of enterprises.It not only affects the net income of enterprises,but also directly reduces the cash holdings of enterprises.Past research has proved that our country’s tax law enforcement has a certain flexibility,so there are many tax avoidance behaviors based on self-interested listed companies.This is not conducive to the fairness and justice of taxation.The implementation of tax avoidance requires real and complex financial arrangements or falsification of financial report statements,which may exacerbate the information asymmetry between the capital market and enterprises,and may cause more serious commissions by concealing the power rent-seeking of managers.proxy problem.How to restrain corporate tax avoidance is an urgent problem for companies,markets and countries.Previous studies have also found that companies with low levels of corporate governance are more likely to have tax avoidance problems,and companies plagued by financing constraints are also more likely to have tax avoidance behaviors.Therefore,improving the level of corporate governance and easing corporate financing constraints may be an effective channel to restrain corporate tax avoidance.The state vigorously promotes the reform of mixed ownership in order to play the role of mutual checks and balances between different capitals and the complementary role of advantageous resources,which may just be able to affect the tax avoidance behavior of enterprises.Therefore,this paper examines whether the implementation of mixed ownership by enterprises can play the role of mutual checks and balances and complement each other,thereby inhibiting corporate tax avoidance.Moreover,for enterprises with different property rights,the paths of mixed ownership may be different.Therefore,this paper will further explore and verify the internal mechanism of mixed ownership affecting tax avoidance in enterprises with different property rights.Mixed ownership is essentially the participation of heterogeneous shareholders with different property rights from the controlling shareholders.By sorting out the nature and shareholding ratio of the top ten shareholders of listed companies,and merging the shareholding ratios of the ten shareholders who have the relationship of persons acting in concert,the paper uses the principle of checks and balances between capitals to construct a measure of mixed ownership.This paper conducts empirical research on the empirical data of Shanghai and Shenzhen A-share non-financial listed companies from 2013 to 2018,and draws the following conclusions:Firstly,mixed ownership is actually a problem of multiple heterogeneous large shareholders.This paper uses heterogeneous large shareholders with both governance willingness and ability as the measurement variable of mixed ownership,and analyzes and verifies that mixed ownership can inhibit corporate tax avoidance.And mixed ownership can inhibit corporate tax avoidance in both state-owned and non-state-owned enterprises.Using Fisher’s combination test to test the difference of the explanatory variable coefficients after group regression,it shows that the entry of non-state-owned capital has a greater inhibitory effect on tax avoidance of state-owned enterprises than the entry of state-owned capital has on tax avoidance of non-state-owned enterprises.That is to say,in the mixed ownership reform,non-state capital can play a more balanced and complementary role.Compared with non-state-owned capital,the effect of state-owned capital still needs to be improved.Secondly,the research on the path of action found that mixed ownership can inhibit corporate tax avoidance by improving the level of corporate internal control and reducing financing constraints.That is to say,mixed ownership can exert "governance effect" and"resource effect" to inhibit corporate tax avoidance.A subdivision study on the action path proves that,in state-owned enterprises,the main way for mixed ownership to restrain the tax avoidance of state-owned enterprises is to improve the internal control level of state-owned enterprises,that is to say,in state-owned enterprises,mixed ownership plays more of a "governance effect";among non-state-owned enterprises,mixed ownership can inhibit tax avoidance of non-state-owned enterprises,mainly by reducing the financing constraints of non-state-owned enterprises,that is to say,among non-state-owned enterprises,mixed ownership plays more of a "resource effect".Thirdly,the checks and balances and complementary effects of mixed ownership are more obvious for enterprises in a poor institutional environment.That is to say,in enterprises with low level of internal governance and insufficient resources due to the unsound external environment,the effect of mixed ownership is more significant.This further proves that the paths of mixed ownership to suppress corporate tax avoidance are"governance effect" and "resource effect",and it can be seen that mixed ownership can be an effective supplement to external market regulation.In addition to the above main conclusions,we also find some significant implications in the detailed study.We divide the sample into a relative controlling group(controlling shareholder holds less than 50%)and a controlling shareholder absolute controlling group(controlling shareholder holds 50%or more).The regression results show that in the relative controlling group of controlling shareholders,heterogeneous large shareholders can significantly inhibit corporate tax avoidance,but in the absolute controlling group of controlling shareholders,the significance of the role of heterogeneous large shareholders is no longer stable,and the level of influence decreases significantly.This result shows that"one share dominance" weakens the checks and balances and complementarities of mixed ownership.In addition,the checks and balances and complementarities of mixed ownership are mainly reflected between state-owned capital and non-state-owned capital.Although there are many differences between foreign shareholders and private shareholders,they are both non-state-owned capital in essence,and the cross-shareholding of the two has not played the expected function of mixed ownership.As a more professional shareholder,financial capital also has not played its due role.It can be seen that the checks and balances and complementarities of mixed ownership have been demonstrated between state-owned capital and non-state-owned capital,but after the subdivision of non-state-owned capital,the checks and balances and complementarities between different types of non-state-owned capital have not yet been brought into play.The innovation and contribution of this paper are reflected in:Firstly,research on mixed ownership in recent years is mainly based on the impact of mixed ownership on corporate performance,innovation,and governance efficiency.As a relatively mature research topic,tax avoidance has been confirmed to be related to the level of internal control and financing constraints of enterprises.The basic function of mixed ownership is to play the role of capital checks and balances and the complementation of advantageous resources.In theory,it will have an impact on corporate tax avoidance,but the existing literature is still seldom covered.This paper uses the data of Shanghai and Shenzhen A-share listed companies from 2013 to 2018 to systematically analyze and verify the inhibitory effect of mixed ownership on corporate tax avoidance and its effect path.To some extent,this extends existing research on mixed ownership and tax avoidance.Secondly,the existing studies on the effectiveness of mixed ownership reform mostly focus on the situation of non-state-owned capital participating in state-owned enterprises.This is probably because the original intention of proposing and developing mixed ownership is to better promote the reform of state-owned enterprises.However,state-owned capital’s participation in non-state-owned enterprises has also become an important part of the mixed ownership reform,but there are few studies on the mixed ownership structure of non-state-owned enterprises.Moreover,the comparative analysis of the internal mechanism of mixed ownership under different property rights in the existing research is obviously insufficient.The mixed ownership studied in this paper not only includes the situation of non-state-owned capital participating in state-owned enterprises,but also includes the situation of state-owned capital participating in non-state-owned enterprises,which is a more comprehensive study of mixed ownership.In addition,this paper also analyzes in-depth comparison and analysis of the different action paths of mixed ownership in inhibiting corporate tax avoidance in enterprises with different property rights.This provides more basis for the direction of mixed ownership reform and the establishment of a long-term mechanism.Thirdly,when selecting indicators to measure mixed ownership,existing research mostly measures the degree of mixed ownership from the presence of heterogeneous shareholders,the degree of diversity of heterogeneous shareholders,or the shareholding ratio of heterogeneous shareholders.It is unbiased to analyze heterogeneous shareholders without considering the actual control level.Moreover,most of the existing studies do not consider the "collusion" of concerted actors instead of "checks and balances" and"complementarity",so they do not combine concerted actors when setting mixed ownership indicators.This is clearly wrong in studying the issue of equity checks and balances.Through the following theoretical analysis,we can see that the key to the role of mixedownership is the two aspects of "heterogeneity" and "check and balance of major shareholders",that is to say,there must be both "quality" and "quantity".Therefore,this paper manually collects and sorts out the nature and shareholding ratio of the top ten shareholders,and confirms and merges the concerted action relationship among shareholders.Then,on the basis of the previous research indicators,the relative variables of the heterogeneous major shareholders’ shareholding are constructed.This is a more reasonable measure for mixed ownership studies.