A Study On The Influence Of Executive Incentive On Corporate Income Tax Avoidance Activities

Since the tax appeared, taxpayers began to take a variety of methods for taxavoidance. For small-scale private enterprises, their owners are also the managers, thescholars consider that their tax behavior are similar to personal taxpayers. However,with the development of social economy and the establishment of modern enterprisesystem, the separation of ownership and governance leads to a situation that the owneris no longer directly operation management, but entrust the power to the managers bycontract to restrain their activities, which brings new problems to the study ofenterprises’ tax behavior. Therefore, the effect of executive incentive on corporateincome tax avoidance become the focus of research areas under the governance modeof modern enterprise. In this respect, foreign scholars’ study are based on Europeanand American data, while listed companies in Europe and America mostly are privateholdings, which is very different from the background of our country’s enterprises. Inconsequence, we cannot draw on empirical evidence from foreign scholars directly,but should be based on the data of listed companies in our country.Based on the above research background, under the analysis framework ofprincipal-agent,this paper refers to the research methods from foreign scholars anduses the data of listed companies in China to explore the following issues: firstly, thispaper analysis the effect of executive incentive on the corporation tax avoidanceactivities without the consideration of the firms’ ownership type, drawing generalconclusions; Secondly, considering the firms’ ownership type, drawing conclusionswhich conforms to the special background of enterprises in our country; Finally, thispaper test these conclusions by the robust test. The main conclusions of this paper areas follows:(1)Salary incentives is negatively correlated with the corporate income taxavoidance activities, while equity incentives is positively correlated with the corporateincome tax avoidance activities.(2)When considering the firms’ ownership type,executive incentive of non-state-owned listed corporation is more significantcorrelation with tax avoidance activities, compared with the state-owned listedcorporation.(3)Fixed assets density and profitability is positively correlated with thecorporate income tax avoidance activities and asset liability is negatively correlatedwith the corporate income tax avoidance activities. Ownership concentration is not related to the enterprise tax avoidance activities without the consideration of thefirms’ ownership type. When considering the firms’ ownership type, ownershipconcentration of state-owned listed corporation is more significant correlation withtax avoidance activities, compared with the non-state-owned listed corporation.