Customer Concentration And Tax Planning

Taxation is a compulsory sharing of corporate earnings by the state with political power,enterprises are motivated to keep more revenue inside the enterprises for their own benefits,accordingly,tax planning activities are generated.The researches of tax planning motivations are extensive and in-depth,but most scholars focus on the factors within the enterprises.As an important external non-financial stakeholder,customers can have a certain governance effect on the operation and decision-making of the enterprises.This view has been widely accepted by the academic community,but whether customers,especially important customers,will influence financial decisions of tax planning is worthy of further studying.Besides,State-owned enterprises occupy an important position in China's economy,state-owned enterprises and non-state-owned enterprises are different in many aspects.As a result,it's also necessary to explore the impact of property rights on the relationship between customer concentration and tax planning.What's more,facing the complex and changeable external environment and the increasingly fierce market competition,whether the enterprise's tax planning decisions will be affected also needs to be further explored.On the basis of previous studies,using the data of China's listed manufacturing enterprises from the year 2009 to 2016 as samples,this paper conducted an empirical test to explore the influence of customer concentration on the level of corporate tax planning and the regulating effects of the property rights and market competition.The empirical results show that companies with high customer concentration will increase their cash holdings as assurance and precaution measures.Tax planning can reduce the cash outflow and function as an effective way of internal financing method.In the process of customer concentration-cash holding-tax planning,enterprises with higher customer concentration will conduct more aggressive tax planning.Compared with state-owned enterprises,non-state-owned enterprises have weaker anti-risk ability and more external financing constraints,which makes the positive relationship between customer concentration and tax planning more significant.Besides,this paper further found that the market competition will enhance the positive correlation degree between customer concentration and tax planning.