Research On The Influence Of External Audit Supervision On Tax Evasion

Enterprise’s tax avoidance out of maintaining its own economic benefits damages the effectiveness of national wealth as well as resource allocation.For the past few years,the issue of tax avoidance is becoming even more violent around the world,which caused the academic circle to discuss about the motivation and influence of enterprise’s tax avoidance;meanwhile,the relevant literatures are enriched.Enterprise’s tax avoidance suffers dual influences from external and internal governance;although some literatures carry out all-round research on the motivation of tax avoidance from the perspective of internal governance,only a few scholars focus on the relations between external audit supervision and tax avoidance.Since external audit is an important external governance mechanism,some countries have listed it into one of the four elements of corporate government;then whether can external audit supervision play the role of governance under Chinese special property right system?For this reason,researching the influence of external audit supervision on tax avoidance contributes to better understanding the role of external audit supervision on enterprises governance as external governance mechanism,which has certain theoretical and realistic significance.Firstly,in the viewpoints of external audit supervision,tax avoidance and relations between external audit supervision and tax avoidance,this paper sorts out existing research;meanwhile,it combines with principal agent theory,deep pocket theory,risk oriented audit theory and signal transmission theory to provide theoretical foundation for research hypothesis.Secondly,this paper analyzes the measurement of external audit supervision and tax avoidance;by taking audit suggestions,audit expenses,and office scale as the surrogate index of external audit supervision,adopting the accounting-tax difference removing system factor and earnings management factors as measuring indexes of tax avoidance,it puts forward research hypothesis.Later,based on the 2008-2015 data of A share listed companies in Shanghai and Shenzhen stock markets disclosed by CSMAR,this paper carries out empirical inspection on influence of external audit supervision on tax avoidance via descriptive statistical method as well as multiple linear regression.In addition,considering the regulating effect of property right characteristic of listed company on the relations,it explores the difference of external audit’s governance effects on tax avoidance under different property right characteristics.The regression analysis obtains the following conclusions:(1)high quality external audit supervision inhibits listed companies’ tax avoidance;(2)In different property right characteristics,the inhibiting effect of high quality external audit supervision on tax avoidance of non state-owned enterprise is more obvious.On the basis of empirical conclusion in this paper,the following suggestions are proposed:(1)perfecting legal system,reinforcing litigation risk of auditing firm,fully playing "deep pocket" effect,and improving audit quality;(2)intensifying the application of modern risk oriented audit in China,developing high quality audit talents,strengthening risk control awareness;(3)the governance effects of external audit are different under Chinese special property right system,which indicates that,state-owned enterprises shall accelerate construction of separation between government and enterprises while requiring auditors keeping high independence so as to realize the identity transition from"intervener" to"vindicator",and convoy the external governance effect of audit.