Non-family Chairman And Family Firms' Tax Avoidance

Since the reform and open up 40 years ago,China's economy has taken off.Private economy grows from weak to strong,and has gradually become the backbone of China's economic development,meanwhile,family firms play an important role.Therefore,it is of great significance to study family firms.The naturally embedded family socio-emotional wealth makes the chairman of the family members pay close attention to the family's reputation,whereas the non-family chairman does not have this effect,which makes the tax avoidance of different family businesses quite differrent.The A-share listed family firm was taken as the sample for research,and we find that the family firms with non-family members as chairman evading tax more,and when the family firm has more pyramid level and get less external attention,the positive effect between non-family chairmen and tax avoidance is more significant.The alternative explanation of the relationship between the non-family chairman and the tax avoidance is excluded from the controlling shareholders' tunneling hypothesis,the management self-interest hypothesis and the internal control hypothesis.Furthermore,when non-family members have financial background,their tax avoidance tendency is stronger;and in family firms where family members are chairman,tax avoidance tends to increase gradually from the “founding generation” to the direct “second generation” and then to the collateral “second generation”.In addition,when family members are chairmen,more information about charitable donations and social responsibility is disclosed,indicating that family members' chairmen will enhance the family's reputation by active participation in social activities.The contributions of this paper are mainly as follows: Firstly,this paper finds that the chairman of non-family members is an important factor influencing the tax evasion of family firms,which enriches the relevant literature on tax evasion.Secondly,it expands the relevant literature on the intergenerational inheritance of family executives in family firms.Finally,the conclusion of the article provides a reference for the outside world to further understand the family firms.