Enterprises Tax Avoidance,Product Market Competition And Cash Holdings

As the main source of national fiscal revenue,stable and reliable taxation plays a decisive role in the sustainable development of national economy.From a corporate perspective,however,income tax means that a company must unconditionally pay a quarter of its operating profit to the state,which is undoubtedly a significant cost.Therefore,in order to relieve the tax pressure and save the cash flow expenditure,the enterprise has a strong incentive to avoid tax.The most direct benefit of corporate tax avoidance is that it can reduce corporate tax burden,help enterprises save a lot of tax cash flow and increase shareholder value.But as a result of tax avoidance activities through deepening enterprise internal and external information asymmetry degree and increased the agency costs within the enterprise,enterprise managers for opportunistic behavior will move quickly consumption cash,the controlling shareholder will also implement free occupy enterprise funds or use the connection transaction transfer enterprise funds of hollowed behavior of small and medium-sized investors,thus reduce the cash holdings and use efficiency is not high.Therefore,whether corporate tax avoidance has a positive or negative effect on the level and value of cash holdings is worth exploring.Based on the research on the concept of tax avoidance agency,this paper takes all a-share listed companies in Shanghai and Shenzhen stock markets from 2009 to2018 as the research object to empirically test the impact of corporate tax avoidance on cash holdings(cash holding level and cash holding value).In order to verify the product market competition in the corporate cash holdings decisions give play to the role of external governance,based on the first cash looted motivation to explore the relationship between product market competition and cash holdings,and based on full information hypothesis and inspected the product market competition in the enterprise bankruptcy liquidation hypothesis of the relationship between tax avoidance and cash holdings has played.Furthermore,the effects of financing constraint and equity incentive on the relationship between corporate tax avoidance and cash holdings are explored,so as to expand the research of tax strategy on corporate cash holding decision.The research results show that:(1)The higher the tax avoidance level of a company,the lower the cash holding level(cash holding value).(2)The more intense the product market competition,the higher the company's cash holding level(cashholding value).(3)Fierce product market competition will weaken the negative correlation between tax avoidance and cash holdings(cash holdings).(4)Serious financing constraints can weaken the negative correlation between corporate tax avoidance and cash holding levels,but can promote the negative correlation between corporate tax avoidance and cash holding values.(5)Equity incentives can weaken the negative correlation between corporate tax avoidance and cash holding level(cash holding value).In this study,corporate tax avoidance and cash holding level are included in the same research framework,which belongs to the impact of tax avoidance on other business decisions,and expands the contents related to the economic consequences of tax avoidance.At the same time,the cash holding value is regarded as a bridge between corporate tax avoidance and corporate value,which weakens the interference of "noise" and helps clarify the relationship between corporate tax avoidance and corporate value.In addition,the study of this paper also provides practical Suggestions for enterprises to regulate tax avoidance,establish a sound management incentive system and cash management system,and give full play to the regulatory governance role of tax authorities.