A Research On Tax Aggressiveness Of Chinese Family Listed Firms

As the economic leverage to adjust and control macro-economy,taxation plays a very important role in stabilizing government's fiscal revenue,adjusting the structure of social production department and optimizing resources allocation.But as for firms,tax burden is an important expenditure,which will reduce cash flow,net profit and shareholder's wealth.As a result,managers always tend to transfer wealth from government to shareholders through tax aggressiveness activities.Tax aggressiveness is a downward management of taxable incomes through tax planning activities with the sole or main purpose of tax avoidance.It will affect government revenues,go against tax administration and even destroy the normal economic order.In addition,firms with different equity structures have great differences in economic behavior decisions.As the most typical representative of private firms,family firms have their unique characteristics in ownership structure and corporate governance,and occupy an important position in China's capital market.Thus,tax aggressiveness behaviors of family firms will have a great impact on the economy development of China,which is a very valuable research perspective.Most of the existing literature are concerned with the influence of the nature of firm on the tax aggressiveness degree,which reveals the difference between family firms and non-family firms in tax aggressiveness degree.Few studies have focused on the relationship between internal governance mechanisms,the types of CEO and tax aggressiveness degree of family firms.Starting from this point,this paper focuses on the impact of three basic governance mechanisms in family firms--family ownership,family control and family management on the degree of tax aggressiveness,and the differences in the decision-making of tax aggressiveness behaviors among family firms with different types of CEO.The change of governance mechanisms and CEO types in family firms will affect the profit and cost behind the tax aggressiveness behaviors,and then firms will change their tax aggressiveness degree under the balance of profit and cost.Secondly,when firms go overseas and operate in a different economic environment,the profit and cost caused by tax aggressiveness will change,so this paper adds the moderating effect of international experience on the relationship between the governance mechanisms and tax aggressiveness degree of family firms.Selecting the data of A share listed firms in both Shanghai and Shenzhen stock market during the period of 2010 to 2015,and adopting the book-tax difference(BTD)to measure the tax aggressiveness degree of firms,this paper compares the tax aggressiveness degree of family firms and SOEs(state-owned enterprises),and analyzes the relationship between the governance mechanisms and tax aggressiveness degree of family firms empirically.Then,international experience is introduced into the model as the moderating variable.Furthermore,according to the types of CEO,we divide family firms into family-CEO firms and professional-CEO firms,so as to investigate the influence of CEO types on firms' tax aggressiveness behaviors.The results show that family firms are less aggressive than SOEs,and the local SOEs have the highest degree of tax aggressiveness.Within family firms,firms run by family CEOs tend to be less aggressive than those run by professional CEOs.This study also finds that family ownership and family control are inversely related to the degree of firms' tax aggressiveness,while family management is positively related to it.However,when family member works as CEO,the increase of family management participation will restrain tax aggressiveness behavior.In addition,the international experience has a significant moderating effect on the relationship between the governance mechanisms and tax aggressiveness degree of family firms.The results reveal that when operating overseas,controlling families of family firms run by professional-CEO can only conduct tax aggressiveness activities by changing family ownership and control,since increasing family management does not work.But family ownership,family control and family management are all powerful tools to adjust the degree of tax aggressiveness for family firms run by family-CEO.The conclusions of this paper can provide some reference to the relevant government departments to implement tax supervision.In the aspect of system construction,the government should constantly fix the flaws in the tax law,and leave no room for firms to manipulate their tax burden.Government should also optimize the local system environment and promote the construction of local tax supervision mechanisms,so as to curb tax aggressiveness behaviors of local SOEs.In the other hand,tax supervision should be targeted,and should focus on the firms with higher possibility of tax aggressiveness,such as firms with higher degree of family management participation and firms with professional-CEO.