Managers Overconfidence,Internal Control Effectiveness And Tax Avoidance

Corporate tax avoidance is the hot topic of scholars at home and abroad research.The traditional view is that tax avoidance can reduce the enterprise's cash flow,which can increase the value of the enterprise.However,in recent years,many scholars study found that enterprises implement tax avoidance will make the business activities of enterprises is more complex,makes it hard for investors to understand and supervision,thus provides the hollowed enterprise managers occupy,may,therefore,tax agent view argue that corporate tax avoidance is not necessarily can increase the value of the enterprise,and even may damage the value of the enterprise.Covering,corporate tax avoidance is a double-edged sword.Effective tax planning theory is that enterprises implement tax avoidance should not only consider the explicit and implicit tax revenue,but also consider tax costs and tax costs,so the implicit tax and the tax cost is the enterprise managers when making tax evasion decision factors can not be ignored.Rational managers when making tax evasion decision need rational measure on the marginal benefits and marginal costs of tax avoidance.Behavior of the company's financial study found,however,the reality of the managers usually are not "completely rational",but"bounded rationality",its decision-making behavior would be influenced by a variety of cognitive and psychological deviation,the typical such as overconfidence.This paper argues that managers' overconfidence will no doubt affect the decision-making activities.Specific to tax avoidance,overconfident managers may be for the benefit of the implementation of tax avoidance and the results make wrong judgment,to the implementation of tax avoidance of risk and potential loss estimate shortage,as a result,we expect compared with rational managers,managers overconfidence can lead to enterprise executes more negative benefit tax avoidance,which not only does not reduce the outflow of corporate cash flow,still can make enterprise face unnecessary tax risk and audit risk,are more likely to cause the value of the enterprise and reputation losses.Given the company decisions related to the governance mechanism,especially the internal control mechanism for managers overconfidence in decision-making influence,in the choice of research of this paper also discusses the internal control effectiveness of tax avoidance of overconfidence of the manager.This article selects 2010-2010,the Shanghai and shenzhen a-share listed companies as research samples,empirical model,discusses the relationship between managers overconfidence and enterprises tax avoidance,and on this basis,the research of effective internal control for the effect of the relationship.The help of the existing academic research and based on the theory of overconfidence and upper echelon theory,this article USES the managers characteristics as proxy variable of measure managers overconfidence,and based on the comprehensive management characteristic index,age,gender,education level,professional title,office,work experience,political background and the joining together of two indicators,principal component analysis(pca)was used to construct the comprehensive index to measure managers overconfidence managers overconfidence,on the measurement of variables for innovation,and based on the particularity of tax evasion decision,managers will also covers the characteristics of the research enterprise,finance director,this position which is the biggest innovation of this article.This paper studies mainly the following conclusions:first,managers overconfidence will lead to more tax avoidance;Second,the sex of the managers,the difference of education level,chairman and general manager whether the joining together of two position,general manager and chief financial officer,whether the joining together of two job leads to managers overconfidence degree of difference,leading to companies have different tax avoidance;Third,the effective internal control to caused by managers overconfidence inhibition of tax avoidance.According to the conclusion,this paper respectively from the Angle of enterprises and tax regulators both to put forward the relevant countermeasures and suggestions.