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Corporate Tax Avoidance and Internal Agency Costs
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TitleCorporate Tax Avoidance and Internal Agency Costs  
AuthorYe Kangtao and Liu Hang  
OrganizationSchool of Business, Renmin University of China,。 
Key WordsTax Avoidance; Agency Costs; Corporate Governance 
AbstractThis study examines the impacts of corporate tax avoidance on internal agency costs. Tax avoidance will increase the information asymmetry between corporate insiders and outside investors, distort managerial incentive contracts, thus exacerbates the agency conflicts between shareholders and managers. Using a sample of Chinese listed companies during the period of 1999-2010 and simultaneous equation model, we find that corporate tax avoidance is positively related to internal agency costs. We further find that independent directors alleviate the positive relation between tax avoidance and agency costs, whereas institutional investors and international Big-4 auditors do not. This study extends the emerging literature on the agency perspective of tax avoidance.  
Serial NumberWP236 
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