Research On The Impact Of Tax Avoidance On Internal Agency Costs

As an important part of the socialist market economy,the private economy is constantly flourishing and growing into an indispensable force for Chinese economic and social development since the Reform and Opening up.However,for a long time,Chinese private enterprises face the problem of insufficient operating funds and financing difficulties,and reducing the burden of taxes and fees to alleviate financial pressures becomes an important economic goal for these enterprises.Different from state-ow:ned enterprises,the private enterprises which are non-government holdings and whose business goals are profits only have strong motivation of tax avoidance,because they relatively take little social responsibility of the government's fiscal revenue.And a large amount of data research also shows that there are many Chinese companies have behaviors of the tax avoidance,especially private enterprises.The study of the economic consequences of tax avoidance is an important aspect of tax avoidance research.But how tax avoidance behavior affects corporate'value,the academic community has not yet reached a consensus conclusion.Based on the framework of principal-agent theory,this paper will focus on tax avoidance of Chinese A-share private listed companies,explore the impact of tax avoidance on the internal agency cost and provide more direct evidence for the consequences of internal agency costs arising from corporate tax avoidance.It will also help to clarify the economic consequences of tax avoidance and the intermediary mechanism of tax avoidance affecting corporate value from the perspective of non-public economy,which has important practical significance.Based on the theoretical logic framework and the micro-data of Chinese A-share private listed companies from 2008 to 2017,this paper explores whether there is tax avoidance of Chinese private listed companies,the relationship between tax avoidance and internal agency costs and the role of internal corporate governance mechanisms in regulating them.From the research,some conclusions for Chinese A-share private listed companies are drawn as follows:Tax avoidance does exist in Chinese A-share private listed companies,and the increase of tax avoidance leads to an increase in agency costs;the increase of the shareholding ratio of the largest shareholder helps to curb the increase of agency costs brought about by tax avoidance;the increase of institutional investor's shareholding ratio may not have a significant effect on curbing the increase in agency costs brought about by tax avoidance;the increase of executive compensation incentives helps to curb the increase of agency costs brought about by tax avoidance.Based on the above conclusions,this paper finally proposes policy recommendations from the aspects of strengthening the objective understanding of the economic consequences of tax avoidance,standardize the equity structure,optimizing investment environment,perfecting the executive compensation incentive system,and Improve the tax environment.