Determinants of Tax Avoidance in Family Firms: The Influence of Next-Generation Ownership and Audit Committee Quality
DOI:
https://doi.org/10.69855/panggaleh.v2i2.829Keywords:
Tax avoidance, Family firm, Next-generation ownership, Audit committee quality, Effective tax rate, Panel data regressionAbstract
Purpose: This study examines whether next-generation ownership involvement and audit committee quality (ACQ) are associated with tax avoidance in Indonesian family firms, and whether ACQ moderates the effect of generational ownership. Methods: A balanced panel of 34 listed family firms over 2019–2023 (170 firm-year observations) is analyzed. Tax avoidance is proxied inversely by the effective tax rate (ETR). Pooled OLS, Random Effects (GLS), and time fixed-effects models are estimated with firm-clustered standard errors, and the Breusch-Pagan Lagrange Multiplier test favors Random Effects. Results: Next-generation ownership is negatively associated with ETR (β = −0.0295, p = 0.003), consistent with greater tax avoidance, and the sign is stable across all three specifications. ACQ is positively but only marginally associated with ETR in the Random Effects model (β = 0.0005, p = 0.089), while its coefficient is negative and insignificant in the other two models, so this result is not robust. The NextGen × ACQ interaction is not significant (p = 0.467). Implications: Generational transition, rather than family control alone, may be a useful risk signal for tax authorities, boards, and nomination committees, whereas formal audit committee attributes alone appear insufficient to constrain tax avoidance. Conclusion: Generational heterogeneity matters for family-firm tax behavior; evidence for audit committee oversight is weak, and the findings are associations rather than causal effects.
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