Research On The Relationship Between Tax Planning And Capital Structure

According to the tax payment 2017 jointly released by the world bank and PwC,In 2016,the average total tax rate of all countries(regions)was 40.6%,while China's total tax rate was 68%,much higher than the average level,The high tax burden makes enterprises have a strong incentive to tax planning.Although existing studies on contemporary economic&management mainly focus on the impact of this behavior on corporate value,cash holding value,accounting conservatism and investment efficiency,there is limited research on whether and how the level of tax planning can affect the corporate capital structure.Also,nowadays,the corporate capital structure decision-making becomes a core research direction in corporate finance.However,previous studies in this field mainly focus on the non-debt tax shield effect around the US market,and rarely focus on emerging economies such as China,where corporate tax planning is widespread and financial decisions can have a significant impact on capital structure decision-making.Therefore,it is significant to verify the correlation and the action path between tax planning level and capital structure decision.In This paper uses the financial data from the Chinese listed company from 2009 to 2017 to research the relationship between tax planning and Capital Structure Choice,and the following results are found.Firstly,the level of corporate tax planning is negatively correlated with the capital structure.In addition,to explore the acting path of negative correlation between the level of corporate tax planning and capital structure,this paper divides the corporate debt financing into formal financial financing and informal financial financing(mainly refers to commercial credit financing),and then grouping test based on the ability to obtain formal financial financing.The results show that for C hinese listed companies,the negative correlation between the level of corporate tax planning and capital structure is due to the "cash flow effect" rather than the "non-debt tax shield effect" obtained from the empirical data of developed countries.Moreover,based on the property of ownership,this paper studies the negative correlation between the level of tax planning and the capital structure of enterprises,and finds that the negative correlation between the level of tax planning and the capital structure is more significant in the group of state-owned enterprises.Furthermore,this paper finds that the level of tax planning will slow down the speed of enterprises to adjust their target capital structure.Finally,the two-stage least square method is used in the robustness analysis,and the results show that the level of corporate tax planning is negatively correlated with the capital structure and is not affected by the endogenous problems such as missing variables and reverse causality.