The Determinants of Tax Aggressiveness in Family Firms: An Investigation of Italian Private Family Firms

Giulia Flamini, Paola Vola, Lucrezia Songini and Luca Gnan
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Giulia Flamini: Department of Management and Law, Interuniversity Centre for Studies on Family Business, University of Rome Tor Vergata, 00133 Rome, Italy
Paola Vola: Department of Economics and Business Studies, Interuniversity Centre for Studies on Family Business, University of Eastern Piedmont Amedeo Avogadro, 28100 Novara, Italy
Lucrezia Songini: Department of Economics and Business Studies, Interuniversity Centre for Studies on Family Business, University of Eastern Piedmont Amedeo Avogadro, 28100 Novara, Italy
Luca Gnan: Department of Management and Law, Interuniversity Centre for Studies on Family Business, University of Rome Tor Vergata, 00133 Rome, Italy

Sustainability, 2021, vol. 13, issue 14, 1-21

Abstract: A recent stream of research has focused on tax aggressiveness, the downward management of taxable income through tax planning activities, and has analyzed its antecedents and consequences, mainly on public companies. Only very few studies, however, have been carried out in the context of private family business and have investigated whether some family firms are more tax aggressive than others, considering some specific features of family firms, such as their distinctive agency conflicts and socioemotional wealth. In this paper, we investigate the antecedents of tax aggressiveness in a sample of private Italian family firms. Our research findings show that tax aggressiveness is positively associated with ownership concentration, the presence of independent members in the board, and the adoption of reporting mechanisms. Instead, we found a negative relation between tax aggressiveness and the use of both strategic planning and a combination of managerial control systems (both planning and reporting mechanisms). We did not find any relation between family CEO and tax aggressiveness. In summary, overall, our findings show that family involvement in ownership, an independent board. and managerialization (the use of managerial mechanisms) are relevant antecedents of tax aggressiveness in private family businesses.

Keywords: tax aggressiveness; determinants; private family firms; ownership concentration; independent board; managerialization (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
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