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Does Tax Avoidance Enhance Firm Value?——Evidence from Chinese Listed Companies
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TitleDoes Tax Avoidance Enhance Firm Value?——Evidence from Chinese Listed Companies  
AuthorChen Xudong,,Wang Xue,Yang Dan and Ye Jianming  
OrganizationSouthwestern University of Finance and Economics;Baruch College at City University of New York;;; 
Key WordsTax avoidance;firm value;firm transparency 
AbstractThis paper investigates the relation of tax avoidance and firm value based on a large sample of Chinese listed companies for the period 2001–2009. Empirical results reveal that tax avoidance behavior reduces firm value, and it does more harm than good to investors in Chinese listed companies. Moreover, corporate transparency does not necessarily enhance firm value unless combined with tax avoidance behavior. Our research also finds that transparent companies are more tax aggressive than their opaque counterparts. Investors in Chinese stock market have negative reaction to tax avoidance behavior. However, this negative reaction could be reduced by transparency. Our paper tests the the agency hypothesis on tax avoidance, and suggests that tax avoidance need not represent a simple transfer of resources from the government to shareholders, rather, managers may capture a share of the benefits of tax avoidance. 
Serial NumberWP141 
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