EconPapers    
Economics at your fingertips  
 

Do multiple large shareholders affect tax avoidance? Evidence from China

Caiyue 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)
JEL-codes: G32 G34 H26 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056019308408
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

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
Bibliographic data for series maintained by Haili He ().

 
Page updated 2020-07-01
Handle: RePEc:eee:reveco:v:67:y:2020:i:c:p:207-224