 Do multiple large shareholders affect tax avoidance? Evidence from ChinaCaiyue Ouyang, Jiacai Xiong and Kun Huang International Review of Economics & Finance, 2020, vol. 67, issue C, 207-224 Abstract: We examine the collusion versus monitoring effects of multiple large shareholders (MLS) on firms’ tax avoidance (TA). MLS can enhance the monitoring of the top shareholder and executives to restrain agency problems, or they can collude with the top shareholder to exacerbate the expropriation of minority shareholders. Using a sample of Chinese firms, we find that firms with MLS engage in less TA than their non-MLS counterparts do, supporting the monitoring hypothesis. The findings are robust after accounting for endogeneity concerns. Further tests show that the impact of MLS on TA is more pronounced when MLS have stronger power and when firms have severe agency problems. In addition, we find that effective external corporate governance can substitute for the monitoring effects of MLS. Most importantly, we find that TA activities are more likely to enhance value with the monitoring of MLS. In sum, our findings are consistent with the literature indicating that MLS make a positive contribution to firm value by reducing the nontax costs of TA. Keywords: Multiple large shareholders; Tax avoidance; Agency problems (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:67:y:2020:i:c:p:207-224 DOI: 10.1016/j.iref.2019.12.009 Access Statistics for this article International Review of Economics & Finance is currently edited by H. Beladi and C. Chen More articles in International Review of Economics & Finance from Elsevier |
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