Economic Policy Uncertainty, Product Market Power And Corporate Tax Avoidance

At present,China is in the stage of economic transformation and upgrading.The government has frequently introduced economic reform policies to optimize resource allocation,which makes the degree of uncertainty in China's economic policies more prominent.The behavior of enterprises is largely born in the external environment in which they are located.Therefore,scholars began to explore the impact of economic policy uncertainty on micro-business behavior.Taxation is an important cost of the company,which will lead to a large amount of cash flow out of the enterprise.Therefore,the tax avoidance problem is widespread in the world,which has aroused widespread concern in the academic and practical circles.However,most of the existing literatures study corporate tax avoidance from the perspective of internal characteristics and governance.Few documents examine the tax avoidance behavior of enterprises from the perspective of economic policy,especially policy uncertainty.Therefore,from the macroscopic point of view,this paper explores the impact of economic policy uncertainty on corporate tax avoidance behavior.Nowadays,market competition is becoming more and more fierce.As an important manifestation of individual competitiveness of enterprises,product market power is an important factor to be considered in enterprise management decision-making.Studies have shown that product market forces will affect the company's earnings management,investment and financing,analyst forecasts and other decisions,then product market forces will affect corporate tax avoidance behavior? Further,the impact of economic policy uncertainty on corporate tax avoidance is there a difference in companies with different product market powers? This is the problem to be solved in this paper.This paper uses a combination of normative research and empirical research.On the basis of literature research and logical derivation,this paper uses the China Economic Policy Uncertainty Index constructed by Baker et al.(2016)as a measure of economic policy uncertainty,and select the Shanghai-Shenzhen A-share listed company from 2009 to 2017 as a research sample to systematically study the impact of economic policy uncertainty on corporate tax avoidance behavior.The results show that when the uncertainty of economic policy rises,the degree of tax avoidance of enterprises will be weakened.This may be because the uncertainty of economic policy weakens the value of tax avoidance of enterprises,and increases the risk and cost of tax avoidance of enterprises;Product market power is significantly positively correlated with corporate tax avoidance behavior.Further research has found that the inhibition of economic policy uncertainty on corporate tax avoidance is more significant in enterprises with weaker product market power.Finally,based on the research conclusions of this paper,relevant suggestions are put forward from three aspects: policy formulation,system protection and how to improve the efficiency of tax authorities.