Impact and moderating mechanism of corporate tax avoidance on firm value from the perspective of corporate governance

Wendai Lv, Qiuchi Meng, Yuanyuan Cao and Jiajia Liu

International Review of Financial Analysis, 2025, vol. 99, issue C

Abstract: Drawing upon data from Shanghai and Shenzhen A-share listed companies from 2012 to 2022, this study investigates the impact of corporate tax avoidance on firm value in various settings. The findings reveal that tax avoidance can reduce firm value. Nonetheless, high-quality internal control mechanisms reduce the negative impact of tax avoidance on firm value. Furthermore, increasing the proportion of independent directors effectively mitigates the detrimental effects of tax avoidance on firm value. Notably, the negative impact of tax avoidance on firm value is more pronounced when institutional investors' shareholding ratios are lower, emphasizing the importance of diverse governance structures in risk management. The study provides important insights for policymakers, corporate managers, and investors, suggesting that improving corporate governance and internal control systems is critical for promoting long-term firm value and mitigating the negative effects of tax avoidance.

Keywords: Corporate tax avoidance; Corporate value; Corporate governance mechanism (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:99:y:2025:i:c:s1057521925000134

DOI: 10.1016/j.irfa.2025.103926

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