TY - JOUR

T1 - Tax Avoidance in Family Firms

T2 - Evidence from Large Private Firms

AU - Kovermann, Jost Hendrik

AU - Wendt, Martin

PY - 2019/8

Y1 - 2019/8

N2 - Ownership structure plays an important role in firms’ decisions on tax avoidance. Recently, the effect of family ownership on corporate tax avoidance has become an issue of increasing interest among scholars from both the fields of family business research and tax research; however, empirical findings have so far remained ambiguous. Based on a unique sample of 678 large private firms from Germany, we show that for unlisted large firms (i) family firms avoid more tax than non-family firms, (ii) tax avoidance increases with the percentage of family ownership, and (iii) tax avoidance is a function of the number of shareholders. We interpret our results as evidence that benefits from avoiding taxes outweigh the non-tax costs in the case of large private family firms in Germany. Furthermore, as the number of family shareholders increases, family firms satisfy increasing demand for dividends by avoiding taxes. © 2019 Elsevier Ltd

AB - Ownership structure plays an important role in firms’ decisions on tax avoidance. Recently, the effect of family ownership on corporate tax avoidance has become an issue of increasing interest among scholars from both the fields of family business research and tax research; however, empirical findings have so far remained ambiguous. Based on a unique sample of 678 large private firms from Germany, we show that for unlisted large firms (i) family firms avoid more tax than non-family firms, (ii) tax avoidance increases with the percentage of family ownership, and (iii) tax avoidance is a function of the number of shareholders. We interpret our results as evidence that benefits from avoiding taxes outweigh the non-tax costs in the case of large private family firms in Germany. Furthermore, as the number of family shareholders increases, family firms satisfy increasing demand for dividends by avoiding taxes. © 2019 Elsevier Ltd

KW - Management studies

KW - tax management

KW - familiy firms

KW - private firms

KW - tax avoidance

UR - http://www.scopus.com/inward/record.url?scp=85064459332&partnerID=8YFLogxK

U2 - 10.1016/j.jcae.2019.04.003

DO - 10.1016/j.jcae.2019.04.003

M3 - Journal articles

VL - 15

SP - 145

EP - 157

JO - Journal of Contemporary Accounting and Economics

JF - Journal of Contemporary Accounting and Economics

SN - 1815-5669

IS - 2

ER -