Tax Avoidance,Managerial Overconfidence And Managerial Perquisite Consumption

Tax revenue is the primary origin of national finance and a significant foundation for ensuring the implementation of national policies.It has received extensive attention from the government and the public all year round.As a means to reduce expenses,tax avoidance generally exists in enterprises.In recent years,"Weiya tax evasion case","Beijing Jianhua land tax evasion case" and other tax avoidance issues to the forefront of public opinion.Therefore,it is particularly important to study the economic consequences of tax avoidance and guide enterprises to avoid blind tax avoidance from the source.Since the central Committee issued the "Eight-point Rules",fighting corruption and combating extravagance has been the focus of the Party’s work.The exposure of events such as "Sixty senior executives of central enterprises played golf with public funds" and "Ningbo Communications Investment Holding Company Executives traveling with public funds" has attracted much attention to the opportunistic behavior of managers.In the company,perquisite consumption is nominally the expense reimbursement for the management’s work and position needs,but under the condition of incomplete contract,it often becomes a way for senior executives to use their power for personal gain.The opaque information environment created by tax avoidance activities may provide opportunities for managers to seek personal gains through perquisite consumption,making the enterprise lose more than it gains.Overconfidence is an important discovery of behavioral finance.In recent years,scholars have studied the influence of overconfidence on investment efficiency,acquisition premium,debt financing,etc.,but no scholars have incorporated managerial overconfidence into the research framework of tax avoidance and managerial perquisite consumption.Theoretically,overconfident managers tend to overestimate their own abilities and underestimate risks,so they will be more bold to take advantage of the opaque information environment created by tax avoidance activities to seek personal gains,but there is no empirical support.Therefore,this paper empirically examines the moderating effect of managerial overconfidence on the relationship between tax avoidance and managerial perquisite consumption.In addition,due to the obvious differences in internal power checks and balances and managerial power between state-owned enterprises and non-state-owned enterprises in China,we further explore the difference in the moderating effect between state-owned enterprises and non-state-owned enterprises.Utilizing the data of China’s A-share listed firms from 2013 to 2020,we make an empirical analysis of the impact of tax avoidance on managerial perquisite consumption and the moderating role of managerial overconfidence.The empirical results show :(1)The higher the degree of corporate tax avoidance,the higher the managerial perquisite consumption.(2)Managerial overconfidence can strengthen the positive correlation between corporate tax avoidance and managerial perquisite consumption.(3)Compared with non-state-owned enterprises,managerial overconfidence in state-owned enterprises has a more significant positive moderating effect on the positive correlation between corporate tax avoidance and managerial perquisite consumption.The above research conclusions will help enterprises to view the impact of tax avoidance on final financial results dialectically,and guide enterprises to carry out active and reasonable tax planning instead of blindly passive and aggressive tax avoidance,thereby decrease the internal agency cost of firms,improve operating efficiency,and further improve national tax efficiency,improve the rationality of managerial perquisite consumption,improve the efficiency of social resource allocation,and promote social equity.At the same time,from a new perspective of corporate behavioral finance,the importance of regulating managers’ psychological state to restrain their opportunistic behavior is explained,which provides an empirical basis for enterprises to effectively deal with the agency problem caused by managerial overconfidence.