An Empirical Study On The Impact Of Tax Avoidance Behaviors Of High-tech Enterprises On The Cost Of Equity Capital

For enterprises in China,the pre-tax profit of One-fourth will be handed to the State or governments by the form of income tax,therefore,the tax burden is an important cost to enterprises or shareholders.In order to reduce costs,enterprises tend to bring tax planning into force to circumvent the income tax,that is,tax avoidance.The so-called tax avoidance,refers to that the taxpayers reduce or relieve the tax burden through the financial arrangement or tax planning,taking advantage of the loopholes in the Tax law or the act which is not expressly prohibited in the Tax law.The tax avoidance has the influence to the cash flow and the production,will also have the influence to the enterprise's equity capital cost by the different path.With the increment of the phenomenon of tax avoidance,domestic and foreign scholars have launched a series of researches,and mainly focus on the following aspects:(1)The factors that affect the behavior of tax avoidance;(2)The measurement and evaluation of the behavior of tax avoidance,and(3)the economic consequences of corporate tax avoidance.However,we find that both foreign studies and domestic studies have less discussion on the relationship between tax avoidance and equity capital cost,and most of them are based on all listed companies,without specific classification of enterprises.Therefore,this paper empirically analyzes the impact of tax avoidance of high and new technology enterprises on the cost of equity capital,further,distinguishing the property rights of the enterprises.Through manual collection,360 non-financial High-tech listed companies which were identified as High-tech Enterprises and disclosed in annual report from January 1,2008 to December 31,2016 are selected as research samples.Through the empirical test,it can be concluded that the tax avoidance of High-tech enterprises can reduce the cost of equity capital,and this negative relationship is significant in non-state-owned High-tech enterprises,but not significant in state-owned High-tech enterprises.The main contributions of this paper are as follows:(1)In the past,most of the domestic and foreign studies were based on all listed companies,but not classified the type of enterprises.Based on the existence of financing constraints in China's High-tech enterprises,the paper studies its tax avoidance behavior on equity capital costs,which enriches the research results of the existing literatures and expands the research perspective on High-tech enterprises(2)for the different property rights of High-tech Enterprises,the response of investors to their tax avoidance behavior may be different.Thus,according to the difference of the ultimate controller,the High-tech enterprises are divided into state-owned and Non-state-owned High-tech Enterprises,and are discussed respectively,which is helpful to understand the economic impact of the tax avoidance behavior of High-tech enterprises and to make up for the deficiency of this research.(3)The taxavoidance may affect the enterprise's equity capital cost through two different pathes,the research conclusion of this paper is helpful to the relevant government departments to understand the motives of tax avoidance,and to provide references for them when making tax policy and implementating supervision.