On the Influence of Digital Tax Administration on Corporate Agency CostsInsights from the "Gold Tax Phase III" Project

The prevalence of internal control failures and financial fraud scandals underscores the severity of the principal-agent problem. The digitization of tax collection and management can mitigate managerial self-interest, thereby reducing agency problems and associated costs. Leveraging the quasi-natural experiment of "Golden Tax Phase III", this study examines data from A-share listed companies spanning 2011 to 2018. Employing a staggered difference-in-difference model, we explore how digital tax management specifically impacts agency costs. Our findings demonstrate that digitalization significantly lowers agency costs by enhancing the information environment and strengthening internal controls. Additionally, management shareholding moderates the effects of digital tax management, while corporate governance levels exhibit an inverse relationship with the degree of tax digitalization. Notably, the governance benefits of tax management digitization are more pronounced in firms with lower information transparency and dual leadership roles.