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

Lee, Cheng-Hsun; Bose, Sudipta

doi:10.1016/j.jcae.2021.100263

Cited by 16 publications

(12 citation statements)

References 76 publications

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“…Agency theory considers that the company's management as an agent will take advantage of the existence of tax incentives in the form of tunneling incentives. The results show that tunneling can be an incentive for tax avoidance (Lee & Bose, 2021;T. Y. H. Tang, 2016).…”

Section: Introductionmentioning

confidence: 87%

Influence of Tunneling Incentive, Risk Management and Company Characteristics on Tax Avoidance with Corporate Social Responsibility Disclosure Asa Moderating Variable In Mining Companies Listed on IDX

Suripto

Novitaria

2021

IJSSB

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In Indonesia, there are tax evasion cases involving taxpayers paying taxes that must be paid in various ways. This gap phenomenon occurs in the case of a coal mining company that has been proven to have evaded tax. In addition, there are many more cases that show corporate tax evasion and have caused many state losses that impact the country's economic growth because of their efforts to reduce costs which are a source of income for the state. This study aims to provide empirical evidence of the effect of applying tunneling incentives, risk management, and firm characteristics using the leverage ratio and firm size, as independent variables, on tax avoidance as the dependent variable, with the use of Corporate Social Responsibility (CSR) as the independent variable. Variable moderator. Determination of the sample using the purposive sampling technique obtained a sample of 8 companies with 40 observational data. The analysis technique and hypothesis testing were carried out by panel data regression analysis through Eviews-11. The results showed that tunneling incentive and firm size had a significant positive effect on tax avoidance. Risk management and leverage do not affect tax avoidance. Corporate social responsibility can only moderate the effect of tunneling incentives on tax avoidance and firm size on tax avoidance but cannot moderate the effect of risk management and leverage.

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Section: Introductionmentioning

confidence: 87%

Influence of Tunneling Incentive, Risk Management and Company Characteristics on Tax Avoidance with Corporate Social Responsibility Disclosure Asa Moderating Variable In Mining Companies Listed on IDX

Suripto

Novitaria

2021

IJSSB

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“…The difference is also reflected in tax avoidance. The study results show that corporate opacity significantly impacts corporate tax avoidance, which is more substantial for family firms than for non-family firms (Lee and Bose, 2021). Although similar arguments are made in numerous relevant publications, to the best of our knowledge, little attention has been paid to confirm this speculation.…”

Section: Introductionmentioning

confidence: 93%

The effects of globalization on family firms' business model in Europe

Qin

Wang

et al. 2022

IJEBR

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Purpose The debate over differences in the behaviors of firms facing globalization is ongoing. This study examines whether globalization impacts the behavior of family firms and if this influence differs between family and non-family firms. Design/methodology/approach Drawing on panel data from the Amadeus database on 62 family firms and 98 non-family firms in Europe, the authors employ panel vector autoregression estimation and the Wald test of Granger causality to verify our conjecture. Additional impulse response functions and the forecast error variance decomposition technique were applied to illustrate complementary shock dynamics. Additionally, the KOF globalization index is used as a proxy for globalization. Findings The results show that globalization visibly impacts family and non-family firms, but the polarity and extent of the effect are different. The authors demonstrate that family firms are in a more favorable position regarding globalization and are less vulnerable to the adverse effects of the globalization process. In contrast, non-family firms fare worse, generating adverse effects. Non-family firms take a more open stance toward globalization than family firms' more conservative behaviors. Research limitations/implications Of course, there are some limitations to the work presented in this paper. On the one hand, the authors’ data span only ten years due to data limitations. This causes the generalizability of the results to be hindered. Therefore, the authors encourage scholars to collect more time series data to increase confidence in the empirical results in future studies. On the other hand, the selection of proxy indicators concerning family firm behavior is mainly focused on financial and employment facets. A multidimensional selection of indicators could make the findings of this study more convincing. Despite its limitations, the study certainly adds to the authors’ understanding of its behavior and globalization activities. Practical implications The authors’ findings have twofold theoretical and practical implications, as they highlight the necessity of developing specific policies aimed at reducing the gap between family and non-family facing globalization and promoting sustainable operations of non-family firms. Although family firms tend to be more frugal and conservative in their overall decision-making, it should be acknowledged that stockholder and stakeholder interest-oriented corporate management policies have made them more capable of steadily improving corporate performance in the sweep of globalization. Social implications To this end, this study deepens the authors’ understanding of the theory of global governance of family firms. It also provides possible paths and directions for future theoretical research on family firms. Globalization affects both family and non-family firms, but our results suggest that family firms are better able to withstand the adverse effects of globalization shocks and adopt efficient governance paths and strategic thinking to gain a competitive advantage. In this regard, the authors encourage non-family firms to actively learn from family firms' operational practices and systems to achieve better adaptability. Originality/value This study provides strong empirical evidence on the effectiveness of family firms' governance patterns and business behavior under globalization. Additionally, this study also reveals that managers can learn from the practical experience of family firms to help them confront business crises and gain a sustainable competitive advantage.

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“…The firm is considered a family firm if it meets any of the following conditions: (1) the chairman and CEO come from the same family; (2) more than 50% of members of the board come from the same family, and less than 33% come from friendship companies; (3) more than 33% members of the board come from the members of same leading family, and at least three directors or managers come from the same family; (4) the ratio of shareholding is greater than the necessary ratio to control. Several recent Taiwanese family business‐related studies have adopted the TEJ's classification to determine whether a firm is family‐controlled (e.g., Boh et al., 2020; Lee and Bose, 2021; Min, 2021). After excluding the family firms in banking and financial sectors governed complicated by complicated regulations and the observations without complete data, 5,269 firm‐year observations from 561 firms during the period of 2006–2015 were used to test the proposed hypotheses.…”

Section: Data and Measurementsmentioning

confidence: 99%

The effects of family involvement on proactive R&D management capability: detrimental or beneficial?

Wong

Lee

2023

R & D Management

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While previous research has discussed the impact of family involvement on innovation by adopting the agency, stewardship, or resource‐based‐related theories, the results remain inconsistent. Incorporating the perspective of social embeddedness associated with the effects of family social capital, this study provides a better understanding of how family involvement affects proactive R&D management capability (PRDMC), by using continuous assessment of family ownership and the top management team. In addition, board capital is an effective mechanism for family firms; however, directors' human and social capital similar and dissimilar in both backgrounds and networks. We further reveal how heterogeneity and homogeneity of human and social capital affect the relationship between family involvement and PRDMC via the lens of board capital breadth (BCB) and board capital depth (BCD). Our findings show that family involvement has an inverted U‐shaped relationship with the PRDMC. We also find that BCB mitigates the negative effects of excessive family involvement on the PRDMC, but has an insignificant effect at low or moderate levels of family involvement. On the other hand, BCD increases the disadvantages of excessive family involvement on the PRDMC, with an insignificant effect on PRDMC at low or moderate levels of family involvement.

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

Cited by 16 publications

References 76 publications

Influence of Tunneling Incentive, Risk Management and Company Characteristics on Tax Avoidance with Corporate Social Responsibility Disclosure Asa Moderating Variable In Mining Companies Listed on IDX

Influence of Tunneling Incentive, Risk Management and Company Characteristics on Tax Avoidance with Corporate Social Responsibility Disclosure Asa Moderating Variable In Mining Companies Listed on IDX

The effects of globalization on family firms' business model in Europe

The effects of family involvement on proactive R&D management capability: detrimental or beneficial?

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