Corporate tax avoidance has been shown to raise the cost of bank debt and lower credit and bond ratings. However, it is unclear whether tax avoidance actually increases a firm’s bankruptcy risk or whether it is just viewed negatively by banks and rating agencies. We find that firms engaging in tax avoidance and firms that are thinly capitalized face higher bankruptcy risk. To account for endogeneity and functional form misspecification, we verify our results using instrumental variable and propensity score matching methods. Our findings are consistent with the view that tax avoidance is a risk-enhancing activity.

中文翻译：

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公司避税活动对公司破产风险的影响

事实证明，避免公司税收会提高银行债务成本，并降低信用和债券评级。但是，目前尚不清楚避税是否会真正增加公司的破产风险，还是只是银行和评级机构对它的否定看法。我们发现从事避税的公司和资本薄弱的公司面临更高的破产风险。为了说明内生性和功能形式的错误指定，我们使用工具变量和倾向得分匹配方法验证了我们的结果。我们的发现与避税是一种增加风险的活动的观点是一致的。