Does Corporate Tax Avoidance Affect The Speed Of Capital Structure Adjustment?

The modern theory of capital structure holds that the capital structure plays an important role in the financial operation process of a company,and a reasonable capital structure is conducive to the maximization of the company’s own value and the stable development of the country’s macroeconomic.At present,the dynamic adjustment of capital structure is an important research field in the study of capital structure.Previous literatures have studied the speed of capital structure adjustment from the perspectives of enterprise characteristics,manager characteristics,industry characteristics and macroeconomic environment,and obtained very rich research results.However,in the above studies,few literatures directly examine the relationship between corporate tax avoidance behavior and the speed of capital structure adjustment.According to the traditional tax avoidance theory,tax avoidance can reduce the capital outflow of enterprises and increase the profits of enterprises.However,a large number of scholars put tax avoidance into the principal-agent framework for analysis,and the results show that due to the complexity and concealment of tax avoidance behavior,it will lead to a series of tax avoidance costs,such as agency conflicts and aggravated information asymmetry.It has become an academic consensus that corporate tax avoidance will bring a series of tax avoidance costs,and there have been studies on the dynamic adjustment of corporate capital structure and its influencing factors that the size of capital structure adjustment cost and income plays a decisive role in the speed of corporate capital structure adjustment.Therefore,whether corporate tax evasion will affect the speed of corporate capital structure adjustment?What impact will it have on the speed of corporate capital restructuring?What is the mechanism of this effect?Are questions we need to ask.Based on this,this paper selects the data of A-share listed companies in Shanghai and Shenzhen from 2008 to 2019 as research samples.By combining normative analysis with empirical analysis,this paper studies whether corporate tax aviodance will affect the speed of capital structure adjustment,further tests whether there are differences in the degree of influence of tax avoidance on the speed of capital structure adjustment under the conditions of different property rights and sizes,and also conducts mechanism tests on the two function channels of agency cost and information transparency.On the basis of reviewing literatures related to corporate tax avoidance and dynamic adjustment of capital structure,relevant concepts are defined.Based on relevant theoretical analysis,the research hypothesis of this paper is proposed.A standard partial adjustment model is constructed to estimate the speed of capital structure adjustment of enterprises,and an extended model is established for regression analysis.The generalized moment estimation method(GMM)is adopted in the estimation process.After empirical analysis of the samples,the conclusions of this paper are drawn:(1)The tax avoidance behavior of enterprises significantly inhibits the speed of capital structure adjustment,that is,the greater the degree of tax avoidance,the slower the speed of capital structure adjustment of enterprises;(2)Compared with state-owned enterprises,the inhibition effect of tax avoidance on the speed of capital structure adjustment is more obvious in non-state-owned enterprises.(3)Compared with large enterprises,the inhibition effect of tax avoidance on the speed of capital structure adjustment is more significant in small enterprises;(4)Agency cost plays an important role in the relationship between tax avoidance and the speed of capital structure adjustment,that is,tax avoidance reduces the speed of capital structure adjustment by increasing agency cost.(5)Information transparency plays an important role in the relationship between corporate tax avoidance and the speed of capital structure adjustment,that is,tax avoidance slows down the speed of capital structure adjustment by reducing information transparency.Finally,based on the theoretical analysis and empirical conclusions,the paper puts forward relevant suggestions from the level of government and enterprise.The research conclusions of this paper are helpful to understand whether and how corporate tax avoidance affects the speed of capital structure adjustment,and further include agency cost and information transparency in it for mechanism test,enriching the literature in related fields,and providing certain enlightenment for the government and enterprises:(1)At the government level:We will accelerate the development of a multi-tiered capital market,strengthen tax oversight,and implement tax and fee reduction policies.(2)At the enterprise level: establish a reasonable concept of tax avoidance,optimize the internal governance mechanism of enterprises and strengthen the awareness of capital structure.