The Research Of Tax Avoidance,Information Transparency And Inefficiency Investment

Traditional theory holds that tax avoidance reduce the tax burden of enterprise,increase the after-tax profits,which is conducive to transfer the wealth from the country to the enterprise.Researches on tax avoidance in recent years have found that the tax avoidance is not always able to enhance corporate value.This is due to companies often take complex and opaque means to cover up their avoidance behavior in order to reduce the risk of being seized and punished by the tax authorities,which exacerbates the degree of information asymmetry of enterprises,shelters manager's opportunistic behavior,and further deteriorate the agency conflict.Growth Enterprise Market develops rapidly,since the first batch of companies listed on GEM ceremony was held in Shenzhen on October 30,2009.Inefficient investment caused by high degree of information asymmetry,haphazard investment and other reasons exist in GEM listed companies.Therefore,studying relationship of GEM listed companies about tax avoidance,transparency and non-efficiency investment relations helps to alleviate agency conflicts,improve investment efficiency of enterprises,as well as regulate the investment behavior of companies listed on GEM,and protect the interests of investors.I carry out an empirical study based on the effective tax planning theory,asymmetric information theory and the principal-agent theory,using 142 companies listed on GEM data for 2010-2013.I select the Book-Tax Differences and amended Book-Tax Differences as a proxy indicator of tax avoidance,and use the Shenzhen Stock Exchange Information Disclosure Ratings measure the information transparency.Firstly,I test the impact of tax avoidance on information transparency;secondly,using the Richardson model to measure inefficient investment.Then I divide the sample into underinvestment group and overinvestment group,and test whether the information transparency can inhibit inefficient investment.Finally,I discuss the impact of tax avoidance on inefficient investment.The empirical results show:(1)The more serious tax avoidance is,the worse information transparency will be.This shows that in order to achieve the purpose of tax avoidance,managers often need to build complex structures and transactions to prevent effective external governance executed by tax authorities and other regulatory authorities.Therefore the implementation of tax avoidance is at the cost of sacrificing information transparency.(2)Good information transparency can play the role of governance,and poor transparency of information will increase the internal and external information asymmetry,leading to inefficient investment caused by adverse selection and moral hazard problems.(3)Tax avoidance will increase non-efficiency investment including underinvestment and overinvestment.I also find information transparency mediated the positive relationship between the tax avoidance and inefficient investment.That means tax avoidance reduce the transparency of information,and then produce adverse selection and moral hazard problems,eventually lead to inefficient investment.Finally,based on the theoretical analysis and empirical conclusion of the article,I give the policy recommendations from the perspective of tax:(1)harmonize of accounting standards and tax regulations,limiting the space of tax avoidance;(2)enhance corporate transparency of tax by increasing the tax-related information disclosure.