Founding family ownership and corporate tax-sheltering activities: Evidence from China

Abstract

In this study, we investigate whether founding family ownership is systematically associated with tax-sheltering activities. We document evidence that family ownership is associated with more tax-sheltering activities and have lower ETR. Our results are consistent with the argument that family firms have more Type II agency problems and lower task risk in China, which in turn motivates the founding families to engage in more tax-sheltering activities to expropriate wealth from non-controlling shareholders for the benefits of founding families.