The Impact Of Corporate Tax Avoidance On Investment Efficiency

Under the new trend of economic development,the problem of enterprise investment efficiency has become a hot topic.The investment growth in our country showed a slow downward trend in 2014,the downward pressure on the economy was obvious,and the industrial structure was not harmoniously coordinated.The issue of investment has received extensive attention from all walks of life.However,the study on investment efficiency based on tax avoidance is still relatively small.In addition,five ministries and commissions jointly issued the "Basic Norms for Enterprise Internal Control" in 2008.What’s more,they further demanded that the internal control system of listed companies should be standardized and the quality of internal control gradually was improved in 2012.Judging from the external supervision and management mechanism,the overall shareholding ratio of institutional investors in listed companies also shows an upward trend,and the function of external supervision and management mechanism has been constantly highlighted.So will corporate tax avoidance affect the efficiency of investment?And how do the quality of internal control and the share proportion for institutional investors affect the relationship between the corporate tax avoidance and efficiency of investment?Based on the above background,this paper selects all the A-share listed companies in Shanghai and Shenzhen stock markets during 2008-2016 as the research samples,and calculates the inefficient investment by Richardson model as the proxy variable of investment efficiency.Furthermore,the paper respectively selects two measures of tax avoidance indicators as the independent variables and makes empirical analysis of the impact on the investment efficiency of tax avoidance and to further explore the relationship between internal control and institutional investment impact from the internal and external governance mechanisms of corporate governance.The conclusion is as follows.Firstly,tax avoidance is significantly and negatively related to investment efficiency,that is,the greater the degree of tax avoidance is,the lower the investment efficiency will be.Second,from the perspective of internal and external supervision and management mechanism,higher internal control quality and institutional investors Share ratio will both reduce the negative correlation between tax avoidance and investment efficiency.In addition,further study shows that the impact of corporate tax avoidance on investment efficiency is mainly reflected in overinvestment,that is,the greater the degree of avoidance is,the greater the degree of investment will be.The findings of this paper have further enriched the study on the economic consequences of tax avoidance and strengthened the understanding of the factors influencing investment efficiency.What’s more,they have provided direct empirical evidence for companies to strengthen internal and external supervision to reduce inefficient investment caused by tax avoidance.In addition,the findings of this study have some practical significance,which provide reference for shareholders to understand tax avoidance,investor decision-making and the supervision of government tax agencies.