Tax Avoidance、management Power And Inefficient Investment

With the rapid development of China’s economy,the competition among enterprises has also intensified,with the accompanying tax avoidance behavior has also become a means for enterprises to improve economic efficiency and market position.The agency conflicts and signal asymmetry that are aggravated by aggressive tax avoidance actions are important factors that damage the value of the company.Therefore,at this time,management uses its power to rationally arrange tax avoidance actions,or uses the concealment of tax avoidance measures to perform its own power rent seeking? Does the improvement of management power help to improve the economic consequences of the company’s aggressive tax avoidance? This relationship has yet to be explored.Therefore,in light of the above research background,this paper starts a study on tax avoidance,management power,and inefficient investment.At present,the tax avoidance has attracted the attention of scholars at home and abroad.The existing research results have discussed the influence factors of tax avoidance and the economic consequences caused by it.This article selects A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2010 to 2016 as the research sample of this article,and studies the influence of tax avoidance on inefficient investment based on the perspective of management power.First of all,this paper sorts out and summarizes the relevant literature on tax avoidance,management power,and inefficient investment.Secondly,based on principal-agent theory,the paper proposes the logical relationship between tax avoidance and inefficient investment,and discusses the effect of management power on the above relationship.Finally,further discuss the impact of regional differences on the above three relationships.The empirical conclusions obtained from this study confirm that radical tax avoidance practices do cause inefficient investment,and that this situation is even more pronounced when management power is high.The specific research conclusions are:(1)Tax avoidance behavior is significantly and positively related to inefficient investment;(2)Management power will strengthen the positive effect of tax avoidance on inefficient investment;(3)Compared with the central and western regions,the eastern coastal areas the positive effect of corporate tax avoidance on inefficient investment is stronger,and the positive effect of management power on the above two is more obvious.The above conclusions indicate that radical tax avoidance will increase the company’s inefficient investment,and the higher the power of management,the more serious this phenomenon will be.Therefore,the choice of corporate tax avoidance and the control of management power have become the key issues for listed companies in China.This paper puts forward relevant suggestions from both government and enterprises.First,the government should:(1)Improve the tax laws and policies,increase supervision of tax avoidance,and improve the cultural level of supervisors;(2)Serve taxpayers,protect the market,improve information disclosure.Second,companies should:(1)Correctly understand tax avoidance and understand the two sides of tax avoidance;(2)Strengthen internal supervision mechanisms and improve management incentives;(3)Rationalize and control management power to maximize corporate value.