Tax Avoidance,Audit Supervision And Firm Value

In recent years,China's economic growth rate has been shifting.In order to ease the double pressure of economic growth and fiscal expenditure,local governments have continuously raised corporate tax burden.According to the Paying Taxes 2017 jointly issued by the World Bank and PricewaterhouseCoopers,China's tax burden ranks 12 worldwide,and at a tax rate of 68%,its burden far exceeding the world average 40.6%.The high tax burden causes enterprises to have a strong motivation for tax avoidance.In addition,with the implementation of the law of the People's Republic of China on Enterprise Income Tax in 2008 and the international convergence of accounting standards,the tax system and accounting standards are gradually separated,providing an opportunity for corporate tax avoidance.In practice,tax avoidance is indeed widespread,such as only in 2014,Jiangsu Province IRS antiavoidance professionals to make up more than 4 billion yuan tax.However,the tax avoidance is a double-edged sword,either because of tax savings to enhance corporate value,but also because of tax avoidance costs derogatory corporate value,which makes the corporate tax avoidance behavior on the corporate value has become a hot topic of widespread concern in academia and practice.The definition of tax avoidance,whether tax,legal or accounting field,has not been determined.There are several kinds of confusion,such as tax avoidance,tax avoidance,tax aggressiveness,tax evasion and tax planning.Therefore,this article further clarifies on the basis of considering civil law,tax law and accounting standards in our country and argues that tax avoidance refers to all acts that reduce the dominant tax revenue of enterprises,including both legal components and gray components.For the study of tax avoidance,there are mainly the traditional view and agency cost consideration of tax avoidance.The former is more common in the early tax research in foreign countries.It is widely believed that the tax avoidance behavior reduces the cash flow of enterprises,alleviates the financing constraints,and the manager play a “good stewardship “ role in favor of corporate value.However,the traditional tax view ignores the existence of agency problems.The newly emerged concept of tax avoidance agents believes tax avoidance brings tax saving benefits,while tax avoidance costs also arise,including direct tax avoidance costs and non-tax costs.In addition,in the period of economic transition in our country,the capital market is still in a state of weak supervision,the tax judicial system is not yet perfect and the discretion of the tax authorities is dominant.In order to reduce the high tax burden,the enterprise can easily produce irrational short-sighted behavior and often has a large amount of tax evasion in the tax avoidance process.In terms of tax avoidance induced its costs,mainly through three paths of the information asymmetry,agency costs,corporate social reputation.Therefore,how to effectively reduce tax avoidance costs? The core is to restrain managerial self-interest and its irrational short-sighted behaviors.Among them,information asymmetry provides a “black box” for the agency costs.So bear the brunt of the problem is to solve the problem of information asymmetry.As a kind of corporate external governance mechanism,certified public accountant audit can partly replace the regulations on the company even in a weak transition economy environment,and has the function of signal transmission.Whether for audit risk or professional skills,auditors are motivated and capable of improving the transparency of information,and identifying the self-serving activities behind tax avoidance by management.Therefore,while studying the relationship between tax avoidance and enterprise value,this paper also wants to prove from an empirical perspective whether audit supervision can play an active and effective role in this relationship.This article is based on the data of Chinese A-share non-financial listed companies from 2008 to 2015.The purpose of this paper is to study the impact of tax avoidance on the corporate value after the implementation of the new CIT law.The results show that tax avoidance behavior of listed companies in China undermines the improvement of corporate value.By the audit supervision of external governance mechanism,this negative effect can be effectively alleviated.In the further study,this paper tested the path of tax avoidance affect the firm value and proved that the radical tax avoidance aggravates the asymmetry of the enterprise information,which creates a “greenhouse “ for the generation of the agency problem and ultimately undermines the enterprise value.The study of this article can also get some enlightenment.We should be alert to the management self-interest behind the behavior of tax evasion of listed companies in our country and scientifically and dialectically treat the tax evasion behavior.If we strengthen the external audit supervision and enhance the transparency of enterprise information,especially tax information disclosure,will be conducive to the promotion of enterprise value.In addition,in order to balance the legitimate rights and interests of both taxpayers and tax bureaus,in order to reduce over-penalization due to the abuse of power by the tax authorities,in order to reduce the phenomenon that because of the tax judicial safeguard system is not in place and desperately choose the aggressive tax activism to reduce the tax burden,we should promote the specialization of the tax justice of our country.