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In-laws’ involvement in management and tax avoidance: Evidence from family firms in China

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  • Shi, Xin
  • Hou, Jingru
  • Gu, Qiankun

Abstract

This paper investigates the effect of the founder's in-laws involved in management on corporate tax avoidance in family firms. Using a sample of Chinese-listed family firms from 2008 to 2018, we find that in-laws’ involvement can significantly increase tax avoidance. We also show that both tax enforcement efforts and social trust mitigate the positive effect. Further analysis indicates that in-law CEOs are more tax aggressive than other types of CEOs. Overall, our paper provides empirical evidence for understanding how in-laws’ involvement shapes tax management activities from the perspective of agency conflict, extending the existing literature.

Suggested Citation

  • Shi, Xin & Hou, Jingru & Gu, Qiankun, 2023. "In-laws’ involvement in management and tax avoidance: Evidence from family firms in China," Finance Research Letters, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:finlet:v:53:y:2023:i:c:s154461232300020x
    DOI: 10.1016/j.frl.2023.103646
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    More about this item

    Keywords

    In-law managers; Family firms; Tax enforcement efforts; Social trust; In-law CEOs;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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