Common Auditors,Corporate Governance And The Contagion Effect Of Tax Avoidance

For a long time,discussions and researches on the influencing factors of tax avoidance have attracted great attention from all circles.In recent years,a series of studies have combined tax avoidance with social relationship networks,and found that the attributes of social networks also have an impact on corporate tax avoidance.As an important part of the economy,any enterprise does not exist independently of other enterprises,and will have a mutual connection through formal or informal systems.China's auditing market is a monopolistic competition market.It is common for several companies to jointly hire the same accounting firm to undertake the auditing business.The common auditors have established a close network of relationships among enterprises,and they have also established a non-public channel for the transmission of private information of enterprises,thereby promoting similar behaviors among enterprises.Further,considering that under different corporate governance mechanisms,the degree of corporate tax avoidance will show a large difference.Therefore,it is of great significance to study the contagion effect of corporate tax avoidance behavior from the perspective of social attributes of common auditor relationship and the relevant factors of corporate governance on the relationship between the two.This paper takes A-share listed companies in Shanghai and Shenzhen from 2009 to 2018 as the research sample.Based on the information transfer function of the auditors' network connection and from the perspective of inter-organization imitation,this paper studies the relationship between common auditors and the contagion effect of corporate tax avoidance behavior,and involves the relevant variables of the corporate governance mechanism including shareholding structure,board governance and management incentives,discussing the differences between the two under different governance mechanisms.The empirical research conclusions are as follows:(1)The companies employing common auditors with the companies that appearing a high degree of tax avoidance also have a higher degree of tax avoidance,that is,corporate tax avoidance behavior has the contagion effect transmitted through common auditors.(2)Compared with non-state-owned enterprises,when the targetenterprise is a state-owned enterprise,the positive correlation between the common auditors and the contagion effect of corporate tax avoidance between enterprises is weakened.(3)Compared with low equity concentration,when the target enterprise's equity concentration is high,the positive correlation between the common auditors and the contagion effect of corporate tax avoidance between enterprises is weakened.(4)Compared with the smaller board of directors,when the target enterprise's board of directors is larger,the positive correlation between the common auditors and the contagion effect of corporate tax avoidance between enterprises is weakened.(5)Compared with lower management compensation,when the target enterprise's management compensation is higher,the positive correlation between the common auditors and the contagion effect of corporate tax avoidance between enterprises is weakened.(6)Compared with the lower management shareholding,when the target enterprise's management shareholding is higher,the positive correlation between the common auditors and the contagion effect of corporate tax avoidance between enterprises is weakened.