TAX AVOIDANCE IN FAMILY FIRMS: EVIDENCE FROM A FAMILY BUSINESS-BASED COUNTRY

This paper investigates the impact of family ownership and management on the corporate income tax avoidance. It examines whether family firms are more tax aggressive than non-family firms in the special environment of Italian enterprises, where the family entrenchment in the management of the family firms is a serious concern. As a novel addition to the literature, we investigate the level of activity and entrenchment of the family in the board and the influence of these factors on tax aggressiveness. The family effect operates in line with findings in earlier US-based research, until the level of entrenchment of the family is moderate. We find that the family has a systematic effect of reduction on the corporate income tax avoidance, nevertheless, including in the model a weak governance element, like CEO duality held by family members, some signals of aggressive income tax policy emerge.