Contingency Information Disclosure and Corporate Tax Avoidance

Abstract

Despite there is a large amount of relevant literature on the two main topics of contingency information disclosure and corporate tax avoidance, no one has yet focused on the relationship between the two. The study in this paper aims to fill this gap. Based on the empirical data of Chinese A-share listed companies from 2007 to 2020, we empirically examines the impact of contingency information disclosure on corporate tax avoidance, using the expected liabilities presented in the financial statements of enterprises. The results of the study found that the degree of information disclosure of contingencies is significantly and positively related to corporate tax avoidance, and the financing constraints brought by contingencies to enterprises are an important channel to influence corporate tax avoidance; further study found that the positive influence of the degree of information disclosure of contingencies on corporate tax avoidance significantly weakened with the improvement of the quality of corporate internal control. The findings of this paper provide important empirical insights for listed companies to improve the quality of accounting information, curb the opportunistic tendency of management and manage corporate tax avoidance.