This study tested the effects on the financial situation of the company as a tax avoidance for 10 years KOSPI listed companies from 2005 through 2014. for these studies, Financial deficit(surplus) ratio, which means the company''s funding shortfall and Free cash flow, debt ratio using the proxy for the financial situation, analyze the relationship between tax avoidance measures, the financial deficit (surplus) ratio and the interaction effect of Free cash flow and debt ratio are analyzed further on whether any impact on tax avoidance. The empirical results are as follows.
First, from the analysis for the entire sample companies the relationship between the financial deficit(surplus) ratio and tax avoidance is not present statistically significant results financial distress situation is a big firms the more corporate internal dimension of funding and internal cash flow increase potentially source of internal cash able to tax avoidane is increase as expected, financial not distress situation that there will be to increase the tax avoidance that can be it is due to the tax burden on the corporate purposes of internal cash reserves in order to increase the flow set to expect that there will be an increase in tax avoidance financial deficit(surplus) ratio in order to minimize the cash outflow is hypothesis 1 that has a significant impact on tax avoidance was not supported.
Second, the analysis on the financial deficits companies the relationship between the financial deficit ratio and tax avoidance does not present a statistically significant result the financial deficit ratio of financial deficits companes affects a significant positive (+) on the tax avoidance that hypothesis 1-1 was not supported.
Third, the analysis on the financial surplus companies the relationship between the financial surplus ratio and tax avoidance does not present a statistically significant result, companies occurs financial surplus is due to the tax burden on the company''s internal cash reserves purposes a financial surplus ratio of corporate financial surpluses that will be set to the expected increase of tax avoidance in order to minimize cash outflows affect a significant positive (+) in tax avoidance that hypothesis 1-2 was not supported.
Fourth, in the the relationship of free cash flow and tax avoidance the entire sample companies, financial deficit firms, financial surplus firms of both statistically significant positive (+), to tax avoidance been presented free cash flow is impact of significant (+) on tax avoidance positive (+) hypothesis 2 was supported. These results can be to a free cash flow of the company itself great situation and financial surplus occurs if the free cash flow larger context, firms increase the tax avoidance within the internal reserved capital outflow minimization objectives, firms cash flow itself with a small situation and the financial deficit occurs if situation free cash flow decreased to be interpreted as the result of being able to increase the tax avoidance which can be a way to secure internal funding.
Fifth, for the entire sample companies target interaction effects of financial deficit(surplus) ratio and free cash flow and relationships of tax avoidande and financial deficits firms target of interaction effects the financial deficit ratio and free cash flow and in relation to of tax avoidance that tax avoidance measures (TAt, TA1t, TA2t) in the interaction effects of the financial deficit ratio and free cash flow a statistically significant negative (-) presented the relationship of the that the interaction effect of financial deficit(surplus) ratio and the free cash flow that has a significant impact on tax avoidance hypothesis 3 and the interaction effect of financial deficit ratio and free cash flow is a significant impact on tax avoidance hypothesis 3-1 was supported. the interaction effect of financial deficit ratio and free cash flow significantly negative(-) on tax avoidane that financial deficit occurr in the previous year that firms free cash flow decreased that can be a by reducing the incentive to increase the tax avoidance within the internal reserved cash outflow minimization objective to decrease tax avoidance considering it is to be interpreted. In contrast, an analysis on the financial surplus firms are not significant negative (-) in relation to the tax avoidance it presented the interaction effect of financial surplus ratio and free cash flow that have a significant impact on tax avoidance hypothesis 3-2 was not supported.
Sixth, for the entire sample companies analyzes the relationship between the interaction effect of financial deficit(surplus) ratio and debt ratio and tax avoidance statistically significant positive (+) is appearing, interaction effect of financial deficit(surplus) ratio and debt ratio has a significant impact on tax avoidance hypothesis 4 was supported. In other words, the interaction effects of financial deficit(surplus) ratio and debt ratio impact of significant positive (+) on tax avoidance that financial deficit occur in the previous year to additional debt issuance that in addition to tax decrease effect able to increase tax avoidance for the internal dimensions cash secure, the financial surplus occurs in the previous year to not consider additional debt issuance, becaused tax decrease effect of debt is decrease could increase the of tax avoidance in order to minimize the tax burden due to the cash outflow relating to the financial surplus(management performance) considered it is to be interpreted. in analysis separating of financial deficit companies and financial surplus companies appears the relationship not significant positive(+) interaction effect of the financial deficit ratio and financial surplus ratio and debt ratio is that significant impact on tax avoidance hypothesis 4-1, 4-2 has not been supported.
testing results of this study are as described above previous year in the financial deficit occur by the financial situation is not good firms internal funding of how the financial deficit than that can increase the tax avoidance that can be decrease tax avoidance financial deficit(management performance) through in the tax burden is reduced points, firms free cash flow itself is a big situation and the financial surplus occur free cash flow is larger context a tax avoidance within the internal reserved cash outflow minimize purposes it may increase that, if by that of firms free cash flow itself is a small situation and financial deficit occur Free cash flow is reduced situation that may increase the tax avoidance which can be a way for securing internal funds, the interaction effect of financial deficit ratio and free cash flow and debt ratio is considered to have been presented with such evidence that could have a significant impact on tax avoidance. these results are expected to be the firms internal facing financial situation is significant impact on tax avoidance to firms target tax avoidance regulatory policy tax authorities of the reference data.