Tax Avoidance Research On Venture Capital Backed Companies

Venture Capital is first initiated in the mid-20th century of America.Usually it is a long-term capital investment to new high-technology or business enterprises with great potential.With digital economy out bursting,small and medium-sized technology enterprises constitute the most active and efficient enterprises in nowadays market.However,these small enterprises need more than just financial support,but also the help with research and development of technology,product promotion,social resources in a market economy,and advanced and scientific methods of corporate governance.Based on the data we draw from GEM listed companies between 2010 and 2015,we did some empirical analysis to investigate the relation between Venture Capital background firms and Tax avoidance.We find:(1)Companies with Venture capital background bare lower income tax rate than Companies without Venture Capital background.(2)The degree of Tax avoidance of Venture Capital backed companies is significantly which also can be interpreted as high tax compliance.The explanation is that venture capital can by lowering equity concentration of the main shareholder,improving the management level of the invested company,supervising and managing cash flow of the invested company,eventually optimize enterprise's decision-making,improve the ability of enterprise tax compliance and tax compliance will,reduce the corporate tax avoidance.