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Do family firms engage in less tax avoidance than non-family firms? The corporate opacity perspective

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  • Lee, Cheng-Hsun
  • Bose, Sudipta

Abstract

We examine the moderating effect of corporate opacity on the relationship between family firms and tax avoidance. We find, ceteris paribus, that family firms and tax avoidance are negatively associated. However, the negative association is attenuated when corporate opacity increases. Our results indicate that corporate opacity affects firms’ tax avoidance, with this effect stronger for family firms than for non-family firms. We also find that tax avoidance by and corporate opacity of family firms are negatively associated with firm valuation. These results are consistent with the opportunistic perspective that family firms engage in more tax avoidance than non-family firms when corporate opacity is higher.

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  • Lee, Cheng-Hsun & Bose, Sudipta, 2021. "Do family firms engage in less tax avoidance than non-family firms? The corporate opacity perspective," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(2).
    • Handle: RePEc:eee:jocaae:v:17:y:2021:i:2:s1815566921000217
    DOI: 10.1016/j.jcae.2021.100263
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    Cited by:

    1. Christophe J. Godlewski & Hong Nhung Le, 2024. "Family ties and firm performance empirical evidence from East Asia," Post-Print hal-04435944, HAL.
    2. Shams, Syed & Bose, Sudipta & Gunasekarage, Abeyratna, 2022. "Does corporate tax avoidance promote managerial empire building?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(1).

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    More about this item

    Keywords

    Corporate opacity; Tax avoidance; Family firms; Type II agency conflict;
    All these keywords.

    JEL classification:

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

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