Research On The Impact Of Ownership Structure On Corporate Tax Avoidance

Taxation is the most important component of a country’s fiscal revenue.Powerful tax collection and management tools can support the implementation of national macro-control policies and provide an economic foundation for maintaining the normal operation of the country.In recent years,China has been greatly improved the level of tax collection and management,and the tax system has been continuously enriched and improved,but the phenomenon of corporate tax avoidance is still severe.From the corporate perspective,tax avoidance can help the company save more taxex and reduce income tax expenses,thereby increasing profits.When the controlling owner is entrenched through his voting power,there is a risk that he is more likely to expropriate shareholder wealth by means of tax avoidance.From the national perspective,corporate tax avoidance will cause national tax losses and is harmful to take full advantage of the national finance.Corporate tax avoidance is a hot research issue in the field of taxation today.Many scholars have conducted rich and in-depth studies on the influencing factors of corporate tax avoidance.The research conclusions show that corporate tax avoidance is not only affected by internal factors such as company size,profitability,corporate governance,It is also affected by external factors such as tax supervision and law enforcement,the rule of law environment,and the degree of financial development.As the basis of corporate governance,the ownership structure is regarded as a very important factor.Different ownership structures form different corporate governance models and produce different corporate governance effects,which will affect the formulation and implementation of corporate tax policies.This paper mainly foucs on the association between ownership structure and corporate tax avoidance.Our sample consists of firms listedon chinese A-share stock market over 2008-2018 period.We found that there is a significant nonlinear inverted U-shaped relationship between equity concentration and corporate tax avoidance.When the controller’s voting righrs is at a relatively low level,the “Entrenchment effect”indicates that increased ownership concentration is positively associated with tax avoidance,the controlling owner is more likely to expropriate shareholder wealth and obtain private benefits through tax avoidance.However,when the controller’s voting rights further increases beyond the minimum level of effective control of the company,the loss of company performance caused by the controlling owner’s expropriation of shareholder wealth is greater than the gains,any furhter increase in the controlling shareholder’s ownership share can alleviate the problem of entrenchment and reduce the degree of tax avoidance because of the "Alignment effect".In addition,this article also finds that with the increasing shareholding ratio and pyramidal ownership structure,there is a divergence between voting rights and cash flow rights,controlling owner became entrenched with a high level of control,while at the same time the low equity ownership level provides a negligible degree of alignment with minority shareholders.Such divergence thus aggravates the "Entrenchment effect" and weakens the "interest synergy effect".At this time,the controlling owner may engage in a higher level of tax avoidance activities to obtain private benefits.