The Effect of Tax Avoidance on Enterprise Value from the Perspective of Agency Cost

Abstract

Tax planning helps a company reduce tax burdens, increase after-tax cash flow and ultimately affect corporate value. This paper selected the data of the A-share listed companies in Northwest China from 2010 to 2017 to establish the panel data model, and discussed the impact of tax avoidance on enterprise value from the perspective of agency cost through multiple regression analysis. The results show that the company's tax avoidance degree has an inverted U-shaped relationship with the enterprise value, because the tax avoidance generates agency cost, when the agency cost is greater than the tax avoidance income, the enterprise value gradually decreases.