4. Conclusions
We began our study with the overarching question of whether family firms are more or less tax aggressive than nonfamily firms. Our findings about the range of effects that family ownership and management have on firm tax policy suggest that the answer to this question depends on how entrenched the family is in the ownership and management of the firm. At first glance, we confirm Chen et al.’s (2010) and Steijvers and Niskanen’s (2014) conclusion that family firms are less tax aggressive than nonfamily firms. Nevertheless, this study measures how sensitive tax aggressiveness is to varying levels of the family’s control and influence, which determine the involvement of the family in the business, both on the side of ownership and on the side of management. It argues that the agency-theory-based relationship between the family status and the tax aggressiveness of the firm is non-linear and that high levels of family involvement have a moderating impact on the beneficial effect of the family status on tax aggressiveness. We recognize that, notwithstanding the prevailing effect of the family’s alignment with the interests of minority shareholders (who call for higher earnings quality), the controlling family could affectthe quality of financial reporting due to the entrenchment effect, which motivates firms to opportunistically manage earnings.
