Financing Constraints, Tax Administration And Tax Avoidance

When the external financing cost is too high,and the internal cash flow of the enterprise is insufficient,the enterprise has to give up some valuable investment activities,and then the enterprise faces the dilemma of financing constraints.Under such circumstances,management has to reduce cash flow expenditures and increase cash flow.Tax avoidance can not only reduce corporate tax obligations but also reduce cash flow expenses.Therefore,there may be stronger tax avoidance motives when companies face financing constraints.However,in areas with high intensity of tax collection and management or strong motivation of tax collection and management,the potential cost of tax avoidance will be significantly increased.Due to the measurement of tax avoidance income and cost,financing constraints will reduce the possibility of radical tax avoidance.This paper first defines the concept of financing constraints,tax avoidance,tax collection and management,and then analyzes the impact mechanism of financing constraints on tax avoidance behavior based on information asymmetry theory and effective tax planning theory,and whether tax collection and management will inhibit the impact of financing constraints on tax avoidance behavior.And put forward the corresponding assumptions.Next,this paper selects the data of A-share listed companies from 2012 to 2017 as the research sample,and conducts an empirical test on the proposed hypothesis.The results show that the financing constraints of the overall A-share listed companies are significantly positively related to tax avoidance.Moreover,the correlation between financing constraints and tax avoidance mainly exists in areas with strong tax collection and management or strong potential for taxation.That is,financing-constrained enterprises will choose tax avoidance to improve the shortage of funds,and tax collection and management can effectively curb tax avoidance caused by financing constraints.In addition,in order to make the conclusion more stable,this paper conducts the robustness test from the perspectives of financing constraints,tax avoidance,tax collection and management and endogeneity.Finally,based on the research conclusions,this paper puts forward corresponding suggestions from the perspective of the enterprise itself and government supervision.