Research Of Influence Of Financial Constraints On The Value Effect Of Corporate Tax Avoidance

Tax avoidance is one of the focus of the research topic at home and abroad.In recent years,the scholars has made lots of studies of corporate tax avoidance about its influence factors and its economic consequences.Among them,studies that use the theory of asymmetric information and the theory of principal-agent as interpretive theory are in the mainstream status.The views of these studies are that tax avoidance will increase problems of asymmetric information and problems of principal-agent,which will increase the agency cost and the other non-tax costs.So most of the research argue that tax avoidance will hurt the corporate value.But these conclusion cannot explain why corporations tend to positive tax avoidance behaviors.Financial constraints make the corporate internal financing dependence,and tax avoidance can produce tax-efficient cash flow,so this study tries to explain the above phenomenon from the perspective of financial constraints.This paper applies theories about financial constraints and tax avoidance to analyze the influence of financial constraints on tax avoidance and its value effect,and then put forward the relevant hypothesis and does empirical research with the data of 2008-2015 listed companies.The result shows that:(1)Financial constraints has positive influence on the degree of corporate tax avoidance,which means financial constraints will promote corporate tax avoidance behaviors.(2)Without considering the financial constraints,the corporate tax avoidance activities will reduce corporate value,but considering the financial constraints,tax avoidance activities will promote the value of corporations with financial constraints.(3)Further study on the path of the influence of tax avoidance on the value effect,we found that tax avoidance activities will increase the agency cost and the financing cost because of the existence of asymmetric information and agency problems in corporations,but when corporations face financial constraints,the tax cash flows have the effect of alternating external financing,which can reduce the corporate financing costs,so the value of corporations with financial constraints will be promoted through tax avoidance behaviors.(4)Regional financial development can alleviate corporate financial constraints,the higher the level of financial development in the region,the lower the degree of corporate tax avoidance,the smaller the value effect it brings.Through studying the corporate tax avoidance behaviors and its economic consequences from the perspective of financial constraints,this paper draw a conclusion that corporations have more aggressive tax avoidance behaviors is due to the presence of financial constraints and the value of corporations will be increased if corporations implement tax avoidance when they have financial constraints.This paper also proposes the decision thinking of tax avoidance that corporations not only need to consider the recessive costs of tax avoidance,also need to consider its recessive income,which has some innovation.Based on the research conclusion,the author has put forward some relevant policy suggestions on business and government.