Multiple large shareholders, investment efficiency and corporate tax avoidance : evidence from China

This study assesses the relationship between the ownership structure and corporate tax avoidance based on annual financial data of Chinese A-share listed firms during 2010-2020. Firstly, the empirical results demonstrate that when a listed firm has multiple large shareholders (MLS), these shareholders are likely to weaken internal monitoring and collude with each other, which will lower its corporate governance level and increase its corporate tax avoidance (CTA) level. The empirical conclusion remains valid after multiple robustness tests. Secondly, the empirical result of the baseline model is significantly influenced by the nature of ownership, the quality of external audit, the tracking of securities analysts and the firm's location. Finally, the result of our mediating effect analysis shows that the presence of MLS reduces the company investment efficiency, which provokes firms to make aggressive financial choices to obtain resources to ensure their future development.