This study examines how institutional investor monitoring and investment horizon shape the relation between corporate tax avoidance and firm value. The sample consists of 3,691 firm-year observations of non-financial firms listed on the Korea Exchange from 2003 to 2014. We test our hypotheses through multiple regression analyses. We find that the negative relation between tax avoidance and firm value is attenuated when independent large institutional investors actively monitor firms and when they maintain longer investment horizons. These results suggest that effective external monitoring and a long-term investment orientation mitigate managerial opportunism inherent in tax avoidance and improve its value implications. This study makes three contributions. First, it identifies the conditions under which tax avoidance becomes less value-destroying, helping reconcile mixed evidence in prior literature. Second, it highlights institutional investors' monitoring intensity and investment horizon as key governance mechanisms that constrain managerial discretion. Third, it provides a framework for examining additional moderators that shape the economic consequences of tax avoidance. Overall, by providing robust evidence on the governance role of institutional investors, this study offers important implications for both research and policy aimed at strengthening corporate governance and enhancing firm value.