Family Firm and Tax Avoidance Behavior

• Main Authors: Hao-Yun Chueh, 闕浩昀
• Other Authors: 陳育成
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/evjnb7

碩士 === 國立中興大學 === 財務金融學系所 === 106 === This paper examines the financial variables and environmental factors effect on the behavior of family businesses tax avoidance. My period was from first quarter of 2015 to the second quarter of 2017. Data of the family business index came from the Ernst & Young Global Family Business Center of Excellence at the Family Business Center at the University of St. Gallen. I use short term (long term) effective tax rate (ETR) and short term (long term) cash effective tax rate (CETR) to proxy the tax avoidance of family firm and testing whether family businesses will avoid taxation due to environmental factors. I considered the following financial variables: Family ownership ratio, ratio of goodwill to total assets, and cash dividend payout ratio. About the external environmental factors, we considered the following variables: the influence of the family firm’s headquarter, whether the family business in the list of top 500 companies or not, the GDP of the country in which it is located. The empirical results showed that the higher family member’s shareholding ratio, the lower possibilities the family business will be a tax avoider. This result confirms the benefit convergence hypothesis proposed by Jensen and Meckling (1976). I also found the higher ratio of goodwill to total assets, the higher probability would family businesses engage in tax avoidance. Results showed the higher cash dividend payout ratio, the more significant tax avoidance behavior for the family firms. When headquarter of a family firm is located in Asia or Africa, the higher probability the family companies will behave tax avoidance. This is because the investment environment in Asia or Africa is not as mature as in Europe and the United States, companies can find loopholes in it and make tax avoidance. We also found that even if company is on the list of the Fortune Global 500s, its tax avoidance behavior is not significant different with firms not in the list, when the country''s GDP is higher, corporations will less likely to behave tax avoidance.