A Study on the Impacts of Family Members’ Empowerment on Earnings Management and Tax Avoidance in Family BusinessA Study on the Impacts of Family Members’ Empowerment on Earnings Management and Tax Avoidance in Family Business
- Authors
- 고윤성; 박선영
- Issue Date
- May-2020
- Publisher
- 한국세무회계학회
- Keywords
- Family firm; Earnings management; Tax avoidance; BTD; Agency problems
- Citation
- 세무회계연구, no.65, pp 1 - 22
- Pages
- 22
- Journal Title
- 세무회계연구
- Number
- 65
- Start Page
- 1
- End Page
- 22
- URI
- https://scholarworks.bwise.kr/cau/handle/2019.sw.cau/63418
- DOI
- 10.35349/tar.2020..65.001
- ISSN
- 1226-1947
- Abstract
- [Purpose] This paper investigates the impact of family firms on earnings management and tax avoidance by studying the variation in book and taxable income differences (BTD). Our analysis also investigates whether the influence of active family control has a different impact on BTD.
[Methodology] Using Desai and Dharmapala’s (2006) methodology, we analyze these factors simultaneously by studying the variation in BTD.
[Findings] Using a Korean sample listed in Korean KOSPI stock market from 2000 through 2009, we find evidence that family firms are more inclined to reduce earnings management and to avoid aggressive tax policies. Further tests reveal that the negative association in family firms stems from those firms in which family members serve as directors or as the CEO.
[Implications] Overall, our evidence suggests that the family firms’ combining of ownership and management mitigates managerial expropriation.
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