External Audit, Executive Power And The Tax Aggressive Behavior

Since China's reform and the continuous development of capital market, tax gradually develops into the core of the company's business. In recent years especially,evasion of tax springs up so frequently in public companies that it arouses the concern and attention of both theoretical and empirical scholars. As one of the principal-agent problem, the company's tax aggressive behavior show different characteristics for their proxy characteristic differences on both sides. In fact, company's external governance environment, individual characteristics of the executive and the company's tax aggressive behavior will display great differences. On the one hand, the main body, motivated by "self-interest", were likely to use proxy mechanism to seek personal benefits, which reflects the characteristics of executive power as the main agent and is likely to affect the company's tax aggressive behavior. On the other hand,the audit which has the function of external governance will have influence on tax radical behavior. Through the literature review, we found that most studies on this theory and the empirical analysis results is relatively few and haven't formed a complete research system. So, this article attempts to analyze its impact on corporate tax radical behavior from the company internal and external governance mechanism,to explore more tax radical problems from multi-angle of view, to build an effective gauge further in theory for the framework of corporate executives, tax agency problems, to provide reference for later research in this field.In this paper, we study the audit supervision, executive power and the relationship between the degree of radical tax by using the combined method of theoretical analysis and empirical research. This paper is divided into five chapters.The first chapter is introduction. It introduces the research background, significance,content and research methods,then puts forward the innovated points, and summarizes the framework of this article. The second chapter defines the concepts and reviews of the related literature. The third chapter makes account of the research hypothesis, and designs research hypothesis model according to the hypothesis by adoptingprincipal-agent theory and management theory of power theory analysis. The fourth chapter is mainly empirical test. Firstly, the author carries out the statistical analysis of index of each agent, then uses the regression method to empirical test on a model,finally, and conducts robustness test. The last chapter is to sum up the research conclusion of this paper, put forward feasible suggestions accordingly.The research conclusion of this article include the following points:(1)Executive power will promote corporate tax aggressive behavior;(2) High quality audit will inhibit the company's tax aggressive behavior;(3) High quality audit will weaken tax radical impact on the company executive power. Based on the results, the paper puts forward the following Suggestions:(1) To improve the external governance effect, a public company should review executive power reasonably, and strengthen supervision of executive authority and power;(2) a public company should actively strengthen the contact and cooperation between the accounting firms and form a high audit quality service;(3) In order to avoid more tax aggressive behavior, the tax authorities should make clear tax policy;(4) Auditing profession self-discipline organization should strengthen the guidance and supervision so as to provide a higher quality of auditing service.