Enterprise Tax Activs Will Lead To The Efficency Of Investment?

Economy slipping, structure being harmoniously proportioned and the macroeconomic regulation and control policy lagging make the economy step into a critical period of transformation. With the inharmonious development of the three major industries, there are serious excess capacities in many industries. It is hard to meet the demand of the market with low value-added products. Therefore investment issues have caused wide public concern. Separation of ownership and management make the management have the right to decide the investment of the enterprise. However, the attenuation of the corporate governance efficiency will have a significant adverse effect on enterprise investment. Our country has taken a series of tax reform since 2008. But the imbalance of the overall tax burden has provided the motivation of tax avoidance and at the same time it may have increased the agency problems of the enterprise which leads to the inefficiency of enterprise investment. Based on this, we conducted the literature review of two agency problems, corporate governance, corporate tax avoidance’s impacts on investment efficiency and its related research. We also took the empirical research methods to discuss the above relationship by using the data of all A-share listed companies from2008 to 2013.We have discovered, (1) For one thing, sufficient corporate governance will weaken the agency problems and information asymmetric of the enterprises which will send positive signals to the capital markets. Therefore, with sufficient corporate governance, one can effectively reduce the company’s financing constraints and its investment insufficiency. For another, the effective governance mechanism of the enterprise will constrain the agent behavior of administrators, preventing the excessive investments of the managers with their private interests. (2) Avoidance behavior tends to reduce the transparency of corporate information, increasing the problem of asymmetric information. Asymmetric information problems may make companies face more severe financial constraints, thus resulting in insufficient investment; further analysis, information asymmetry caused by tax will increase the agency conflicts between shareholders and managers, resulting in inefficient business investment. Therefore, the efficiency of investment and non-tax avoidance positively correlated. (3) Based on the efficiency of corporate governance, we divided our samples into two groups, samples with good corporate governance and samples with bad corporate governance. Considering the positive correlation between enterprises’ tax avoidance and the inefficiency of investment, we added the corporate governance variable to divide the sample. We found that in the enterprises with bad corporate governance, there is a significant negative correlation relationship between corporate governance and inefficiency investment. However in the enterprises with good corporate governance, the result is opposite. The reason is that good corporate governance has weakened the information asymmetry and agency problems while poor corporate governance has provided the convenience for management to plunder enterprise resources. Based on the research above, this paper has put forward the relevant policy recommendations.