Author(s)

Yuran Tao

Corresponding Author

Yuran Tao

ABSTRACT

Corporate tax avoidance often aggravates the internal and external information asymmetry and agency conflict, and affects the future cash flow and thus the efficiency of corporate investment. Therefore, this paper selects all A-share listed companies from 2007 to 2020 as the research sample and empirically investigates the relationship between corporate tax avoidance and corporate inefficient investment based on the Richardson investment prediction model with product market competition as the moderator variable. The research results show that tax avoidance has a negative impact on corporate investment efficiency, i.e., the higher the degree of corporate tax avoidance, the lower the investment efficiency, and this negative impact is mainly manifested as tax avoidance triggers excessive investment. Further analysis reveals that product market competition effectively suppresses the negative impact of tax avoidance and ultimately optimizes the investment efficiency of companies. The findings of this paper enrich the research on tax avoidance from the perspectives of agent effect and capital effect, and also have important implications for companies and relevant tax collection and management departments.

KEYWORDS

Tax avoidance, Product market competition, Corporate inefficient investment