Controlling Shareholder’s Equity Pledge and Tax Avoidance of Listed Companies
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| Title | Controlling Shareholder’s Equity Pledge and Tax Avoidance of Listed Companies
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| Author | Wang Xiongyuan,OuYang Caiyue and Shi Zhengyang |
| Organization | Zhongnan University of Economics and Law, Accounting School |
| Email | wangxiongyuan72@163.com；1075190421@qq.com；zhenyangshi@foxmail.com |
| Key Words | Equity Pledge; the Risk of Transfer of Control Right; Tax Avoidance |
| Abstract | We illustrate that tax avoidance can improve performance and it is also a potential way to reduce the risk of transfer of control right in equity pledge. Our empirical results demonstrate: We find the results as following: (1) companies with controlling shareholders pledging their equity, engage more in tax avoidance activities. (2) It is more likely that controlling shareholders face higher risk of transfer of control right and companies engage in tax avoidance activities in firms with non-SOE controlling shareholders, located in the eastern part of China and with lower controlling shareholder’s equity ratio. (3) The positive relationship between equity pledge and tax avoidance only exists in the lower tunneling group, lower financing constraints group and upward real earrings management group. (4) Only in the companies with smaller board size, lower proportion of independent directors, lower ratio of management expense, higher asset turnover ratio and lower other receivables, the effects of equity pledge on tax avoidance is positive Our study illustrates a new setting on the literature of tax avoidance and equity pledge and provides insight into tax authority. |
| Serial Number | WP1058 |
| Time | 2017-02-24 |
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