Research On The Correlation Between Product Market Competition, Tax Avoidance And Corporate Value

Tax plays an important role in the countries all over the world,and financial revenue primarily comes from tax.In terms of china,we pay more attention on tax,for example,reform tax system in 1994,corporate income tax reform in 2008,replace business tax with value-added tax,or VAT in 2016.The enterprise,a profit-making organization,starts the process of reducing tax burden in order to improve the profit of the enterprise.As a result,it brings the issue of tax avoidance.In academia,that tax avoidance is seen as a enterprise decision-making,is bound to influence the value of the enterprise.The traditional view that tax avoidance can reduce tax burden,create wealth for shareholders,which also provides a certain basis for enterprises to avoid tax avoidance.According to the effective planning theory,tax avoidance reduces the tax burden and generates the potential non tax costs.Therefore,whether tax avoidance can really improve enterprise's value is still to be discussed.However,the high level of corporate governance can reduce non tax costs and increase enterprise's value.With the booming of socialist market economy,competition among enterprises are fierce.According to the research of Fee and Hadlock,based on the full information hypothesis,reputation incentive hypothesis and liquidation threat hypothesis,product market competition is seen as an external governance mechanism of enterprises,play the effect of corporate governance through the role of information and supervision.Ultimately,it effects on the enterprise value.In this paper,the research is the beginning of the behavior of tax avoidance,we are based on asymmetric information theory,principal-agent theory and the effective planning theory,and put forward that tax avoidance will damage corporate value.Considering corporate governance and focusing on enterprise external governance mechanism,product market competition,we combine the theory about product market competition,and point out that it can enhance corporate value and reduce the damage to the relationship between tax avoidance and enterprise value.Since there are two types of enterprises in China,distinguishing property rights is more consistent with the current market situation.Then,we conduct empirical research on all A-share listed companies in2014-2016 in Shanghai and Shenzhen,find that the final results are consistent with the theoretical analysis,which provides a theoretical basis for theoretical analysis.Finally,according to the conclusions of this paper,we put forward suggestions from two aspects:effective tax management and improving the industry competition mechanism.