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http://dx.doi.org/10.14400/JDC.2014.12.3.177

The Effect of Firm's Strategy in Investment Decision  

Choi, Kyong-Soo (Institute for Business Research & Education in Korean University)
Choi, Jeongmi (Dept. of Accounting, Cheongju University)
Publication Information
Journal of Digital Convergence / v.12, no.3, 2014 , pp. 177-187 More about this Journal
Abstract
We investigate the association between tax strategy and investment efficiency focusing on manager's investment decision. Specifically, we examine the effect of manager's tax avoidance on the firm's investment level. The result show that as the degree of tax avoidance becomes higher firm's over investment increases. This result implies that the available resources generated from firm's tax avoidance induces over investment. Prior researches have been interested in the effects of firm's tax strategy on firm value. However, there is little literatures regarding the effects of firm's tax strategy on management's real investment decisions which provides the important implications about the mechanisms between tax strategy and firm value. In this respect, our research provides a meaningful results which demonstrates the effects of firm's tax strategy on manager's real investment decisions. This will provide useful implications for the investors and government regarding manager's tax avoidance behavior.
Keywords
Tax Strategy; Tax Avoidance; Investment Decision; Investment Efficiency; Over Investment;
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