Reasonable Tax Avoidance,Internal Control And Inefficient Investment

In recent years,the "new normal" of China’s economy has become one of the hot topics people follow closely.In this new normal,the center of China’s economic development shifts from focusing on quantity to focusing on efficiency.As one of the driving forces for the development of the capital market,corporate investment efficiency has also received extensive attention from scholars.As far as existing research findings,inefficient investment is mainly affected by agency problems and information asymmetry.As one of the “culprits” to aggravate the agency conflict and information asymmetry,in theory,tax avoidance will also have a certain degree of impact on the company’s inefficient investment.In this paper,we take all A-share listed companies during 2008-2017 as the samples,and conduct theoretical analysis and empirical research on the relationship between tax avoidance and inefficient investment.We also add internal control into the framework of principal-agent theory,and study the role of internal control in it.Furthermore,we divide the samples into two groups: the over-investment group and the under-investment group,and finally draw conclusions and put forward the suggestions.The results of this paper show that:(1)Radical tax avoidance behaviors will increase the agency cost and reduce the transparency of information,thus leading to inefficient investment in the enterprise.Moreover,this influence is mainly reflected in the excessive investment of enterprises.(2)High-quality internal control can reduce corporate tax risk,restrain managers’ self-interested behaviors,and restrain corporate tax avoidance behaviors.(3)Internal control helps to alleviate agency conflicts,improve information transparency,reduce information asymmetry,and weaken the impact of corporate tax avoidance on inefficient investments.Moreover,this effect is mainly reflected in the over-investment group,and the performance in the under-investment group is not stable enough.This paper uses theoretical analysis and empirical methods to verify the impact of corporate tax avoidance on inefficient investment and the internal governance of internal control,which will enrich the research on tax avoidance agency concept,and provide references for researches on investment efficiency,based on the framework of principal-agent in the future.