SEC review of tax disclosures in family firms

Samer Khalil (), Denise O’Shaughnessy () and Ian Twardus ()
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Samer Khalil: Murray State University
Denise O’Shaughnessy: Murray State University
Ian Twardus: Murray State University

International Journal of Disclosure and Governance, 2023, vol. 20, issue 2, No 3, 138-154

Abstract: Abstract In this paper, we investigate the SEC review of tax disclosures in the 10-k filings of family firms in the USA over the period 2004− 2018. Relying on agency theory, we show that family firms are less likely to receive an SEC comment letter that identifies deficiencies or omissions in tax disclosures than non-family firms. We further document that family firms resolve SEC comment letters including tax disclosures in a significantly shorter period of time relative to non-family firms. Additional analysis demonstrates that the number of issues raised in SEC comment letters including tax issues in family firms is significantly less than that in non-family firms. These findings expand the family firm literature by documenting more transparent and compliant tax disclosures in family firms. They also contribute to the literature related to the SEC comment letters by investigating SEC review of tax disclosures. This is important since tax disclosures are mandatory in nature, represent the sole source of public information related to taxes, are used by the IRS to detect tax avoidance, and are becoming increasingly relevant for various stakeholders.

Keywords: Tax disclosures; SEC comment letters; Family firms (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41310-022-00150-8

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