Research On The Effect Of Tax Avoidance On Firm Value

Discussions and researches on tax avoidance have lasted for a long time.In the past studies on tax avoidance,they all think that tax avoidance will increase the after-tax income of enterprises,thus contributing to the improvement of the value of enterprises.In recent years,more and more scholars have proposed that the tax avoidance behavior of enterprises will bring huge agency costs.The cost of tax avoidance may exceed the benefit of tax avoidance,thus damaging the value of enterprises.The empirical test results using enterprise data also prove their theory.However,since tax avoidance is not conducive to corporate value,why are there still widespread tax avoidance activities around the world? These researches can not explain this problem very well.Starting from the financial risk of enterprises,this paper deeply studies the impact of tax avoidance on the value of enterprises.Considering cost and income,this paper analyses how tax avoidance affects the value of enterprises,and how financial risk affects the relation between tax avoidance and firm value.Tax avoidance benefits are mainly the increase of enterprise's after-tax benefits,while the cost of tax avoidance includes reputation loss,tax penalty costs,and agency costs of the first and second categories.Therefore,it is generally considered that the cost of tax avoidance is higher than the income of tax avoidance,thereby reducing the value of enterprises.Subsequently,we incorporate financial risks into our analysis.And we find that with the increase of financial risk,the invisible income of tax avoidance increases,the agency cost decreases.At this time,the negative correlation between tax avoidance and firm value is alleviated..This paper chooses the data of A-share listed companies from 2009 to 2017 as samples and finds that:(1)increasing financial risk of enterprise will stimulate enterprises to actively avoid tax;(2)tax avoidance will damage the value of enterprises;(3)The existence of financial risk can weaken the damage of tax avoidance to firm value.Finally,based on the results of theoretical analysis and empirical research,this paper puts forward suggestions for enterprises and tax authorities respectively.First,enterprises should carefully examine the motivation and necessity of tax avoidance,carefully measure the income and cost of tax avoidance,and be cautious in tax avoidance,and establish a scientific and rational concept of tax evasion.In addition,in order to reduce the degree of tax avoidance and ensure the steady development of China's economy,tax authorities should carefully consider how to reduce the tax burden of enterprises and guide enterprises to make reasonable tax planning.