A Study On The Relationship Between Enterprise Value And Tax Burden

Since China’s reform and opening policy,Chinese family enterprises have made a rapid progress. They have become the main force of promoting the economic development of China and made a great contribution to the China economy. As a result, their value attracts the academe to research. At present, the study of family enterprises’ value is mainly concentrated on the structure of enterprise administration, especially the influence of stock sharing structure on their value. For instance, the Pyramid structure, stock cross holding and entrusts agency cost. However, the achievement from the point of tax burden how affects the family enterprise value is not much. Most studies consider that tax burden is negatively related to the value of the enterprise. However, the research from the point of investment efficiency believes that it’s positively related to the value. The relationship between these two parts has no clear conclusion. So it is necessary to make further research on their relationship. Obviously, the problem of how to enhance the family enterprise value furtherance can not be solved only from the field of stock sharing structure or the tax burden. If we want to enhance the enterprise value better, we need to consider the dual impact of the tax burden and stock sharing structure on firm value. Therefore, according to the previous studies, this article has analyzed the dual impact of stock sharing structure and the tax burden on chemical firm value.The conclusion of the study shows: The relationship between cash flow right in stock sharing structure and the enterprise value is a inverted U. When the enterprise cash flow rights is higher than the industry average, the chemical family enterprise value will be reduced if we increase cash flow rights and reduce the tax burden equal proportionally under the condition of the cash flow right square absolute elastic on the enterprise value is greater than the absolute elastic tax burden on enterprise value. In contrast, when the chemical family enterprises are in the period of stable development, the enterprise value will increase if we increase cash flow rights and the tax burden equal proportionally under the condition of the cash flow right square absolute elastic on the enterprise value is lower than the absolute elastic tax burden on enterprise value. For the chemical family enterprises, the significance of this study is to improve the enterprise value effectively by making the reasonable scheme of adjusting the cash flow rights and the tax burden based on the current cash flow rights by the family shareholders and the level of the family enterprise tax burden.