Corporate Governance and Related-Party Transactions in the Tax Avoidance-Investment Relationship

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Key Points

To analyze the relationship between tax avoidance and investment, and the influence of corporate governance and related-party transactions.
Analyzed data from 2016 to 2022 across 7 years.
Applied two-stage least squares estimation (2SLS) to address endogeneity and ensure robustness.
Conducted regression analysis considering corporate governance and related-party transactions.
Tax avoidance positively influences investment, indicating firms use funds obtained through tax avoidance for growth.
In strengthened corporate governance, the positive relationship between tax avoidance and investment persists, whereas it weakens in weaker governance structures.
Firms highly reliant on related-party transactions show a weakened positive relationship between tax avoidance and investment, suggesting inefficiencies in fund usage.

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Investigates how corporate governance affects investment outcomes through tax avoidance.

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Banseok Seo (2026) studied this question.

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