Auditor Size And Local SOEs’ Tax Aggressiveness

The more the economy develops,the more important the tax issue is.Reducing tax burdens through various tax avoidance measures to increase corporate profits seems to be evolving into a realistic choice for companies in various countries.State-owned enterprises play an important role in China’s economic and social development.Compared with central enterprises,natural property rights links make local SOEs more closely related to government departments and have special characteristics in taxation behavior.In recent years,from the perspective of principal-AGEnt theory,research on corporate tax avoidance activities is becoming an emerging academic field.Based on this theory,this paper examines the impact of the SIZE of the firm on the tax evasion activities of listed state-owned SOEs.First of all,because the larger accounting firms can effectively reduce the information asymmetry of enterprises and restrain the AGEncy problems of enterprises,the enterprises of the“Big Eight”auditing will not worry about the insider opportunistic behaviors triggered by the tax avoidance process.Companies with“Big Eight”audits are more likely to adopt aggressive tax planning practices.Secondly,because of the large non-audit business of large-scale firms,based on the rent-seeking theory,all the rent-seeking needs of the transaction affect the independence.In the literature review of corporate tax avoidance,most of the classic literature on tax avoidance is foreign literature,and many studies in China are also based on foreign research.Because of China’s national conditions,economic system and other characteristics,China’s tax administration and foreign countries still have a certain Difference.Among the reLEVant literatures in China,some scholars have pointed out that China’s tax collection and manAGEment practices have led listed companies to obtain various tax reduction policies.If the effective tax rate is directly used as an AGEnt for corporate tax avoidance,there may be serious biases.There is no unified answer to how accounting firms affect corporate tax avoidance.Larger firms will be able to provide higher quality auditing services and therefore be able to curb corporate tax avoidance;however,the firm is adjusting its business and non-audit services have an uncertain impact on the independence of auditing services.For state-owned enterprises,the special property rights of local state-owned enterprises will have an impact on the independence of the firm.The firm is likely to become a link in the interest-seeking chain;local state-owned enterprises have lower penalties for auditing,so the firm may also reduce audit quality.This part of the literature is small in number,so this is also the focus of this paper.Based on the perspective of market competition,the greater competition in the auditing industry may result in lower prices and influence independence.For the audited units,the market is highly competitive,and tax avoidance is carried out in order to maintain profit margins.In terms of fiscal pressure,on the one hand,local state-owned enterprises will avoid taxation because they need to create economic benefits,and it is also possible to carry out "reverse feeding " behavior with local finance.Based on the existing literature research,this paper will carry out research on the scale of the firm and the tax avoidance behavior of local state enterprises.I will analyze the external environment from the perspective of market competition and local financial pressure.This paper selects the data of local state-owned enterprises in A-shares from 2008 to 2017,and constructs an empirical index to measure the degree of tax avoidance of enterprises.The conclusions of the multiple regression analysis show that the companies audited by BIG8 have higher tax avoidance,which confirms the theoretical expectation of this paper.We further found that the external environment of the company can influence the relationship between the SIZE of the firm and the tax avoidance behavior of local state enterprises.When local SOEs face more intense competition in the product market,the degree of influence of BIG8 audits on tax avoidance will be significantly enhanced;when local SOEs face local fiscal pressures,the impact of BIG8 audits on tax avoidance will be Significantly weakened.In recent years,market competition has intensified,and building a healthy market is the basis for sound economic development.China should further improve the reLEVant policies and regulations of accounting firms,and prevent behaviors that harm the interests of the state from moving away from the law.At the same time,it is necessary to strengthen the effectiveness of the competition market and strengthen the corporate governance of local state-owned enterprises.