The impact of family ownership on tax avoidance: International evidence

Constantinos G. Chalevas, Leonidas C. Doukakis, Nikolaos I. Karampinis and Olga-Chara Pavlopoulou

International Review of Financial Analysis, 2024, vol. 94, issue C

Abstract: Motivated by the global interest on tax avoidance and the unique nature and contribution of family firms to the global economy, this study examines the impact of family ownership on the tax behaviour of firms listed in 38 capital markets from 2008 to 2019. The study is the first to investigate both conforming and nonconforming tax avoidance practices across family and non-family firms using an international setting. The empirical findings document that family ownership is associated with lower conforming and nonconforming tax avoidance. The result is attributed to the reputation cost of tax avoidance that is higher in family firms due to socioemotional wealth preservation considerations that discourage tax avoidance practices. In addition, eponymy serves as a disciplining mechanism that further reduces tax avoidance in family firms. Finally, the cultural dimension of power distance -the societal belief that the members of an organization are not equal- attenuates the restraining effect of family ownership on tax avoidance.

Keywords: Family ownership; Corporate tax avoidance; Conforming tax avoidance; Nonconforming tax avoidance; Reputation costs (search for similar items in EconPapers)
JEL-codes: G30 H26 M40 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:94:y:2024:i:c:s1057521924002497

DOI: 10.1016/j.irfa.2024.103317

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