Exchange Inquiry Letter Supervision And Corporate Tax Avoidance

With the development of our country,the issue of taxation has become more and more important.And the problem of tax avoidance has become more and more serious in recent years.In modern companies with separation of ownership and management rights,tax avoidance strategies often become a rent-seeking tool for company management and a means for management to seek private interests,which obviously reduces the effectiveness of executive incentives and leads to an increase in agency costs within the company.Since 2014,in order to implement the regulatory transformation,the Shenzhen Stock Exchange and the Shanghai Stock Exchange have successively expanded the information disclosure through trains to all listed companies,and the application of non-punitive supervision represented by inquiry letters has become more and more frequent.Turning to "post-event supervision",the role of the mechanism of inquiry letter supervision is prominent.Therefore,this thesis links the exchange’s inquiry letter supervision with the tax avoidance behavior of enterprises,and examines the impact of inquiry letter supervision on the tax avoidance behavior of listed companies.Based on the annual report inquiry letters issued by the two major stock exchanges from 2015 to 2019,this thesis studies the corporate tax avoidance behavior after companies receive the inquiry letters.The research found that:(1)The supervision of inquiry letters has"information effects" and "governance effects".Compared with companies that did not receive inquiry letters,the tax avoidance behavior of listed companies that received inquiry letters was significantly reduced.(2)Inquiry letter supervision has spillover effects on industries,that is:if a company in a certain industry receives an inquiry letter,the tax avoidance behavior of companies that have not received a letter in that industry will also decrease.In addition,this thesis adopts PSM for verification;in order to solve the endogeneity problem and ensure the robustness of the results,it also uses the PSM paired samples to construct the difference-indifference one year and two years before and after the receipt of the letter using DID model to study the effect of inquiry letters on corporate tax avoidance;at the same time,removed the sample of tax-related inquiry letters to study the net effect of annual report based inquiry letters on corporate tax avoidance;the above three robustness test results show that the conclusion is still valid.In addition to testing whether inquiry letter supervision can inhibit corporate tax avoidance,this thesis also conducts further research,including:(1)Examining the "information effec" and"governance effect" of inquiry letter supervision in inhibiting corporate tax avoidance.(2)Judging from the subdivision characteristics of inquiry letters,the annual report inquiry letters issued by the exchange for different enterprises have different contents,which also have different impacts on the tax avoidance behavior of enterprises.(3)Judging from the characteristics of the reply letters,the company’s reply letters are also different.Listed companies may make different choices based on the content of the letters and the circumstances of the reply letters,resulting in different regulatory effects.(4)Examining the sustainability of the regulatory effect of inquiry letters.At present,the research on the validity of the exchange inquiry letter is mainly carried out from the perspective of information quality,that is,earnings management,and less is to test its effectiveness from the perspective of corporate tax avoidance.The main contribution of this thesis is to use corporate tax avoidance as an example to verify the effectiveness of the inquiry letter supervision system in improving corporate governance,and to reveal the changes in corporate tax avoidance behavior after companies receive an inquiry letter from the annual report.It verifies the effectiveness of the front-line supervision represented by.the exchange inquiry letter as an important innovation of China’s securities supervision system,and provides certain empirical data for the regulatory agencies to formulate relevant policies,so as to promote the continuous development of my country’s capital market and improve the efficiency of resource allocation.In addition,it can also enrich the research on the influencing factors of corporate tax avoidance behavior,and found that the institution has continuity.