Tax Avoidance in Family Firms: A Multi-Level Literature Review

1 Introduction

Recently, anecdotal evidence has pointed towards the ubiquity of tax avoidance practices on a global scale, with even highly esteemed companies reportedly engaging in such strategies (Davis et al. 2016). Consequently, the exploration of tax avoidance activities has garnered significant attention from researchers, regulators, and practitioners, owing to the pivotal role of taxation in the broader economy of firms and nations (Huseynov, Sardarli, and Zhang 2017).

From a conceptual perspective, the stream of research suffers from the lack of a universal definition of tax avoidance (e.g. Dunbar et al. 2010). Following the perspective of tax accounting research, Chen et al. (2010, p. 1) define tax aggressiveness as “downward management of taxable income through tax planning activities”. Alternatively, from an ethical assessment, tax avoidance is the ‘non-genuine’ arrangement of transactions aimed at tax optimization that an agent pursues by interpreting the law literally and not according to the democratic intent of the legislator (Lenz 2020). Or even more, aggressive practices can result in evasion if they have a clear criminal intent to defraud, resulting in extra legem activities, which cause an abuse of the tax law (Vlcek 2019).

For this reason, scholars have placed tax avoidance practices along a continuum of tax planning strategies that starts with legal tax benefits, from the moment the firm is not strictly compliant with tax laws and may end with tax evasion (Bird and Davis-Nozemack 2018; Hanlon and Heitzman 2010; Payne and Raiborn 2018). Accordingly, to broadly consider tax avoidance behaviours, this study follows this definition, which pivots on tax avoidance as all practices (legal or illegal) of a firm to pay less tax compared to GAAP tax expense, resulting from corporate financial statements (Dyreng et al. 2008; West 2018). This definition strictly considers the business, whose tax planning results in a lower corporate tax burden, as the unit of analysis. Consequently, the distinction between legal and illegal practices is outside the scope of the analysis, as only the tax authority has the ultimate responsibility to determine the legal boundaries of corporate tax avoidance decisions (Hasseldine and Morris 2013). In essence, tax avoidance could involve both legal actions, such as using amortization discretionally or maximizing deduction, and illegal behaviours, such as hiding assets in offshore accounts or underreporting income (West 2018).

The topic of tax avoidance is situated at the crossroads of different disciplines, including psychology and sociology (e.g. Belahouaoui and Attak 2024; Kirchler 2007). However, from a business perspective, it is specifically grounded in the fields of finance and accounting.

From a financial perspective, tax strategies may shape a firm’s value. Indeed, ex ante cost of capital increases with deviations from expected levels of tax avoidance: investors are concerned about firms who engage in tax avoidance perceived as unfair and less transparent (Drake et al. 2019). Second, the cash flows available as a result of tax-aggressive behaviours increase companies’ liquidity providing greater financial flexibility and empowering firms to better plan and execute their investment strategies (Ha and Feng 2021). Thus, tax-driven actions optimize tax burdens and contribute to a more robust financial position. Third, tax strategies may influence Merger and Acquisitions (M&A) activities. Indeed, several tax aspects are considered to be drivers of M&As, e.g. tax attributes regarding the possibility to benefiting from unused tax credits and tax losses, the management of the assets to allow higher future deductions, the adjustments of the capital structure for tax deductibility, and the choice of a target firm in a tax haven country (e.g. Desai and Dharmapala 2006; Temouri et al. 2022).

From an accounting perspective, tax avoidance involves a set of accounting tactics aimed at lowering reported earnings, due to either implicit taxes and/or book-tax conformity. It effectively reduces firms’ taxable income and, consequently, their tax obligations, ultimately affecting the financial reporting quality (Chen et al. 2010).

The intersection of the finance and accounting fields allows for a broad perspective which helps understanding tax avoidance from the corporate unit of analysis. Indeed, the decision for a firm to engage in tax avoidance practices implies a careful consideration of the associated business benefits and costs (Kovermann and Wendt 2019). On the one hand, such a strategy positively contributes to enhancing the value of a firm by reducing corporate tax obligations towards the state, which represents a considerable cost for a firm (Austin and Wilson 2017). On the other hand, managers can reap personal benefits from tax planning at the expense of shareholders’ returns (Chen et al. 2010), as it results in an immediate boost to the firm cash flows.

In family firms, the distinctive characteristics of family decision-makers may introduce additional considerations, particularly regarding economic and emotional benefits and costs (Gómez-Mejía et al. 2007). Following the agency theoretical approach (Chen et al. 2010; Kovermann and Wendt 2019), family involvement at different levels of the business is a source of ‘control’ which is often increased at the expense of others (non-family members). Thus, tax avoidance stands as a strategy to transfer wealth from public stakeholders (i.e. state) to family shareholders which might benefit from having greater financial leeway to extract private rents (Gaaya et al. 2017). Indeed, the controlling family could maximise its utility by exploiting the high cash flow resulting from aggressive tax behaviours (Parisi and Federici 2023).

In contrast, the behavioural agency model suggests that family firms are more willing to preserve socioemotional wealth (SEW), which makes them reticent to practices jeopardising family affective endowments (Gómez-Mejía et al. 2007). That is, family firms are less prone to engage in tax avoidance since it may spoil the family (firm) reputation if detected (Bauweraerts et al. 2020). From a financial perspective, it might negatively alter the perception of investors, who feel that tax aggressiveness deviates from the generally positive behaviour expected of family businesses (Cao et al. 2023).

As attested, there is growing scholarly attention to tax avoidance in family business domain although a lack of conclusive empirical evidence on the topic persists. This situation underscores the necessity to analyse and systematize prior research. At the same time, there is no uniform definition of tax avoidance nor a consensus on its measurement. Therefore, this study aims to uncover (theoretical) shortcomings, measure challenges and establish a framework for organizing (future) research in this domain. Stemming from these premises, we aim to answer the following research questions: i. How has the research on tax avoidance in family firms been developing? and ii. What is the future of research on tax avoidance in family firms?

Whit this aim, we employed a systematic literature review with a narrative approach and, drawing from three different databases, we analysed the 42 academic papers published up to June 2024. Starting from the analysed literature, we provided a conceptualization of tax avoidance measurement and categorized the papers into four levels of analysis: business, family, individual, and context.

Our findings indicate that most papers focused on the family level, aiming to both discern if family owners show a different inclination towards tax avoidance and what family characteristics influence tax behaviours. While family members act as a shield towards opportunistic behaviours, if tax avoidance is perceived as a tool to protect family endowment, it seems that family firms engage in tax-saving strategies more than non-family firms. However, such results are country-dependent as well as contingent on other, business and individual, factors.

Stemming from our narrative systematization, this study differs from previous scholarly efforts for several reasons. First, by disentangling tax avoidance behaviours in family firms at four different levels, the paper offers a more family business-focused, nuanced perspective, addressing the call for more studies considering “…more than one level of conceptualization and analysis …” (Daspit et al. 2024, p. 10). In doing so, we go beyond previous similar attempts (i.e. Bergmann 2024; Khelil and Khlif 2023) which, being based on a single-level analysis, inevitably fail to fully capture the inherent complexities of family businesses. Instead, a multilevel approach is crucial for deepening our understanding of the unique characteristics of family firms and addressing their heterogeneity (Daspit et al. 2024). At the same time, while valuable previous literature reviews, such as Bergmann (2024), investigate the topic, they assumed a broader perspective, by considering policies of finance, accounting and tax, that constrains a deeper understanding of tax avoidance behaviours in family firms. In contrast, our specific narrow allows us to offer insights on tax avoidance measures and tailored research avenues by making our work more informative for scholars than previous studies (e.g. Khelil and Khlif 2023). Moreover, the paper extends the existing literature reviews on the topic (i.e. Bergmann 2024; Khelil and Khlif 2023), which stopped their research in 2022, by considering an updated time frame.

In this way, the article contributes to scholarly knowledge and provides guidance for future research questions that academics may address. First, it establishes the state of the art on tax avoidance in family firms, a topic which is attracting scholars and policy interests. Moreover, the study highlights several gaps in research and offers scholars a research agenda, calling for a more in-depth deciphering of tax avoidance strategies in the family business context.

The structure of the article is as follows: it begins with an explanation of the research methodology. Subsequently, it presents the findings of the literature review, followed by a discussion of the results through a thematic overview of studies and suggestions for future research directions on the topic. Last, it concludes by highlighting contributions and implications for both theory and practice.

2 Methodology

Following previous studies (e.g. Campopiano et al. 2017), this study employs a systematic selection of the articles and a narrative review to scrutinize the literature on tax avoidance in family firms. While the systematic approach establishes a robust and transparent foundation for the research process, ensuring replicability (Bettinelli et al. 2017), the narrative approach provides a complementary perspective, by allowing researchers to synthesize and interpret existing literature (Baumeister and Leary 1997). Matching the two approaches contributes to a comprehensive understanding of the research topic, combining the strengths of methodical selection with the richness of contextual interpretation.

We followed four steps for the selection strategy presented in Figure 1 in the form of a PRISMA flowchart (Moher et al. 2009).

Figure 1:

Paper selection strategy.

In the first step, we combined widely accepted databases – Scopus, ISI Web of Science, and EBSCO Business Source Complete (Torchia et al. 2015) – to identify appropriate and relevant studies for our review. We searched for peer-reviewed papers (also “in press”) published in scientific journals in English until June 2024. To ensure the relevance of potential articles for the investigated topic, we utilised two sets of search strings,^[1] in the title and/or abstract and/or keywords (Carbone et al. 2022). The first set focused on the realm of tax avoidance, while the second set centred on family business. Employing this research strategy allowed us to extract a total of 112 distinct items, after eliminating duplicates.

The second step involved two authors independently reviewing titles, keywords and abstracts to evaluate the articles’ relevance to the research aim. Discrepancies were resolved through a third scholar’s input. 33 articles were excluded as they were outside the scope, or they did not deal with either tax avoidance or family businesses.

In the third step, for the remaining 79 articles, we assessed the consistency with the topic. We read full texts and adopted double-inclusion criteria for eligibility embracing the focus of article analysis. An article was deemed eligible for inclusion if it was based on tax avoidance, either as a conceptual framework, independent or dependent variable, within the context of family business, not merely considered as a control variable but as a focal point or influencing factor (Michiels and Molly 2017). Specifically, to establish a foundation for our analysis, we broadly refer to tax avoidance as the ability of a firm to pay less tax compared to GAAP tax expense, resulting from corporate financial statements (Dyreng et al. 2008; Hanlon and Heitzman 2010; West 2018). This definition, as previously highlighted, leverages exclusively on the unit of analysis of the firm, and not on the individual one. Accordingly, we included in our sample all the articles focusing on the firm tax planning aimed at avoiding tax thus reducing corporate tax liabilities. Conversely, we excluded papers concentrating on behaviours aimed at reducing the individual tax burden, e.g. inheritance tax (e.g. Shin 2020), not included in the definition.^[2]

As regards family businesses, several definitions, still debated, have been identified, including combinations of elements such as family ownership, family involvement in governance and management, intergenerational and transgenerational perspectives (e.g. Anderson and Reeb 2003; Chua et al. 2003; Miller et al. 2007; Villalonga and Amit 2010). This view, prompted researchers to investigate differences between family businesses from non-family businesses, thus creating dichotomous definitions (family business status) and, more recently, has led to more nuanced definitions that allow a distinction between various types of family businesses (family heterogeneity) (e.g. Prencipe, Bar-Yosef, and Dekker 2014). We embraced both kinds of definitions and when the described differences represented the core of the analysis or the reference setting, then the article was included in our sample.

As a result, the article to be included was required to contribute either a conceptual advancement in comprehending tax avoidance within the family business or to empirically test and address expectations regarding tax avoidance in the family business context.

Following the elimination of 38 articles that did not meet these specified criteria, we were left with 41 contributions deemed relevant to our review.

The fourth step involved hand-searching and citation-tracking to ensure that no relevant article was missed. This ‘ancestry approach’ consists of screening the reference list of publications on the topic (Sandgren et al. 2023) across top journals in accounting, entrepreneurship, finance, governance, and management. It provided one additional article (Bauweraerts and Vandernoot 2013) which, although not present in database extraction, provides relevant insights into the behaviour of family businesses and tax aggressiveness, as well as a peculiar alternative measure of tax avoidance (see Table 3 for the measure ‘Corrected Equity’). Therefore, the final sample comprised 42 contributions published between 2010 and June 2024.

Once the collection procedure ended, we organized the sampled literature. To gain a thorough understanding of the research pertaining to the topic, we classified articles based on: i) theoretical framework (if specified); ii) study type (quantitative, qualitative, or conceptual); iii) study design (sample size and observation window), iv) study setting (geographical context), v) family focus (examination only of family firms or comparison with non-family counterparts), vi) tax avoidance measurements. To ensure consistency and internal validity in this categorization, each author independently pre-tested a sub-sample of four articles. Following individual classifications, we discussed any coding differences or disagreements. When necessary, we sought the input of an external scholar to arrive at a final interpretation (Cirillo et al. 2018).

Finally, we qualitatively systematised insights from the literature. First, we paid particular attention to the theoretical rationale used by scholars and the definitions and measures provided for tax avoidance in order to underpin tax avoidance dimensions. Second, following previous literature reviews, we interpreted the articles’ findings through four levels of analysis: i) business level, ii) family level, iii) individual level, and iv) context level (Campopiano et al. 2017; Carbone et al. 2022). The inclusion of these levels is based on recognizing family firms as a system made up of three interdependent components (Habbershon, Williams, and MacMillan 2003). Business level includes the factors that, beyond family business status, affect or are affected by the firm itself, such as firm goals, governance, organization, and resources (Chua et al. 2012). The family level encompasses factors that may influence or be influenced by family involvement at various levels (Chrisman et al. 2013). The individual level involves elements that affect or are affected by the individual characteristics of the members composing the family business. Last, consistently with previous similar contributions (Campopiano et al. 2017; Wright et al. 2014), our framework incorporates a fourth level, i.e. the context, in which the (three-levels) family firm is embedded. Thus, this level involves the economic, social, political, cultural, and legal environment.

Stemming from this framework, we conducted an independent classification of the papers, focusing on the ‘level of analysis’ employed. We identified the key variables investigated and examined the relationships between them. Thus, a paper was classified at the family level if it investigated i) family business status thus comparing family to non-family businesses in terms of tax avoidance practices; ii) how family heterogeneity affects the tax avoidance strategies; iii) how family business status/heterogeneity shapes the relationship between an element at business/individual/context level and tax avoidance. Differently, the article was classified at other (business/individual/context) levels if examined: i) how specific business/individual/contextual characteristics influence tax avoidance within family firms; ii) how these business/individual/contextual factors shape the relationship between family business status/heterogeneity and tax avoidance practices.

3 Findings

3.1 Descriptive Findings

Before discussing the key findings of the qualitative review, we offer a descriptive overview of the articles included in our collection in terms of publication trend, outlets, and item classification.

Figure 2 shows the trend of the papers on tax avoidance in family firms, providing the number of papers per year and their cumulative published amount.

Figure 2:

Research trend.

These studies have been conducted between 2010 and June 2024, with the majority of them (more than 80 %) published in recent years (2019–2024). This finding suggests that academic attention to the research realm emerged notably after the publication of Chen and colleagues’ pivotal paper in 2010. Such work marked a turning point in the exploration of tax avoidance within the context of family business (Bauweraerts et al. 2020) highlighting the uniqueness of these companies. Moreover, contemporary global challenges (e.g. military conflicts and health emergencies) have increased political (Li et al. 2022), policy (Benkraiem et al. 2020) and environmental uncertainty (Huang et al. 2017), ultimately friction financing. Thus, managers are keen to engage in aggressive tax strategies – by showing higher after-tax earnings and cash flows – to mitigate the negative effects of uncertainty on credit availability and financial performance (Athira and Ramesh 2023). These dynamics seemed extremely relevant in the context of family business, whose peculiarities, have trigged scholars’ attention and produced mixed findings (e.g. Bona-Sánchez et al. 2020; Temouri et al. 2022): on the one hand, the controlling family succumbing to an entrenchment effect, resulting in the firm operating inefficiently due to neglecting tax avoidance, on the other hand, the controlling family ramps up tax avoidance efforts, exploiting the vulnerable minority and reaping the benefits of such strategies.

The papers in our collection have been published in 38 different journals and most of them belong to management (15 papers), accounting (10), finance (8), and family business (5) areas. Moreover, the analysis indicates that the most prolific journals, in terms of the number of papers published, pertain to the field of management – Journal of Business Research (2), accounting – Journal of Contemporary Accounting and Economics (2), and family business – Family Business Review (2), Journal of Family Business Strategy (2).

Table 1 describes the articles’ classification findings according to i) theoretical framework, ii) study type, iii) study design, iv) study setting, v) family focus and, vi) tax.

Table 1:

Descriptives.

	N. of papers
Theoretical Framework
Agency theory	15
Socio-emotional wealth	9
Resource-based view	2
Multiple	8
Others	8
Study design
Quantitative method	42
Study setting
Spain, USA	4
Belgium, China, Germany, Indonesia, Italy	3
France	2
Canada, Czech Republic, Finland, India, Jordan, Korea, Marocco, Pakistan, Poland, Taiwan, Tunisia, Turkey	1
Multi-countries	5
Family focus
Family business	15
Family business and non-family business	22
Both focus	5
Tax avoidance measurements
Single	13
Multiple	29

Focusing on the theoretical approach, agency theory is the main perspective employed in the collection (15 papers). Following this approach, literature explores the implications of the convergence (divergence) of interests between owners and managers (family shareholders and minority shareholders) and the “alignment effect” (“entrenchment effect”) influencing tax avoidance strategies (e.g. Moore et al. 2017; Benkraiem et al. 2024). Also relevant is the SEW perspective (9 papers). Following this framework, papers interpret the family firms’ tax-saving choices through the lens of their pursuit of non-economic objectives, such as safeguarding family wealth and reputation (e.g. Kuo 2022; Bauweraerts et al. 2024). In addition to these predominant frameworks, various other theoretical lenses are adopted by authors to explore family firms’ tax avoidance strategies. For example, the resource-based view (RBV) is employed (2 papers). Often, multiple theoretical frameworks are combined to comprehensively analyse the intricacies of tax avoidance within family firms (8 papers).

As for the study design, the articles in our sample are all empirical, mainly adopting panel data analysis.

Regarding the study setting, it stands as a relevant item to consider since tax avoidance strategies are contingent upon the country’s tax system (Alm, Bahl, and Murray 1990). The analysis reveals that the main covered settings are Spain and USA (4 papers), Belgium, China, Germany, Indonesia and Italy (3 papers), France (2 papers), followed by a smaller concentration of articles in other alternative countries or with multi-country settings.

Considering the focus of the analysis, most of the papers in our sample investigate the tax avoidance differences between family firms and non-family counterparts (22 papers), while fewer concentrate on family business heterogeneity (15 papers). Moreover, some authors first look for a difference between family and non-family firms and then analyse the peculiarities of family firms only (5 papers).

Last, in terms of tax avoidance measurements, most articles use several measures to capture the level of tax aggressiveness, both within the main analysis and the robustness tests (29 papers), and very few use only one measure (13 papers).

Table 2 provides information on tax avoidance measurements descriptives.

Table 2:

Tax avoidance measurements descriptives.

Tax Avoidance Measurement
Effective tax rate (ETR)	29
Cash effective tax rate (CETR)	17
Book tax difference (BTD) or book tax gap (BTG) and declinations	8
Permanent book-tax differences (PERMDIFF)	4
Others	8

The most common are two effective tax rate measures, i.e. the effective tax rate (e.g. Bauweraerts et al. 2024; Mafrolla and D’Amico 2016 – 29 papers), and cash effective tax rate (e.g. Bauweraerts et al. 2020; Moore et al. 2017 – 17 papers) followed by the measures of book-tax difference (or book tax gap) and declinations, e.g. the residual book-tax difference (e.g. Cao et al. 2023; Benkraiem et al. 2024 – 8 papers) and permanent book-tax difference (e.g. Brune et al. 2019b – 4 papers).

The following sections will introduce tax avoidance measurement challenges and will discuss the findings of qualitative systematization of the articles according to their levels of analysis.

4 Discussion

This study reviewed the developing literature on tax avoidance in family firms by assuming the business unit of analysis and distinguishing four levels of analysis: business, family, individual and context (e.g. Campopiano et al. 2017). Based on this multi-level approach, Figure 3 presents a thematic overview offering the key streams explored by scholars (in the continued circles) as well as highlighting promising areas for future studies (in the dotted circles). The ensuing discussion deepens into the findings and proposes avenues for future research in the realm of tax avoidance.

Figure 3:

Tax avoidance in family firms: a firm-based phenomenon from a multi-level approach.

Our literature review highlights that despite the interest scholars have shown in the topic and their advancements in understanding the relationship between family businesses and tax avoidance, some issues remain to be clarified, and several aspects still need to be addressed, leaving space for future research at each level we investigated.

Starting from the business level, papers in our sample agree that governance mechanisms, both internal and external, can mitigate agency problems within the family firms, thus reducing the incentive for tax avoidance. However, among the mechanisms analysed, we did not find attention being paid to family governance mechanisms which, in contrast, may play a significant role and have recently been shown to reduce agency problems (Suess 2014) and information asymmetries (Duréndez, Madrid-Guijarro, and Hernández-Cánovas 2019). Thus, an interesting research question may be: a) do family governance mechanisms moderate the need to account for investor concerns and the level of tax avoidance in family firms? Indeed, the use of family governance mechanisms may balance the desire to minimize tax liabilities with the need to maintain transparency and ethical practices, especially in light of “investor worries”. Investors have shown increased concern regarding the tax avoidance practices of firms when determining investment choices (Marriage 2014): although corporate tax avoidance may elevate shareholders’ expectations of forthcoming cash flows, the direct reduction of tax expenses induces investors to undervalue a firm ‘not paying its fair share’ to the government (Dyreng et al. 2016). However, this relationship becomes contingent upon corporate governance mechanisms, which may positively influence stock returns (Desai and Dharmapala 2006).

Another interesting research stream identified by our literature review pertains to the role of engaging in CSR activities in mitigating the family propensity towards tax aggressive behaviours. However, despite the scholarly effort, some aspects that could potentially act as catalysts (or inhibitors) remain in the background. One of these is certainly the “local embeddedness” of family firms (Bichler et al. 2022; Labaki and Mustafa 2023), which considerably affects CSR propensity and performance (e.g. Ge and Micelotta 2019). It implies that social relationships are established on the foundation of trust, reciprocity, identification, and obligations, extending beyond the boundaries of the family firm to engage with the local community (Adjei et al. 2016). This can be considered a crucial factor that boosts family firms to engage in CSR (Stock et al. 2024), as family firms with local embeddedness use CSR to respond to the needs or requirements of the community (e.g. Peake et al. 2017). Consequently, a pertinent research question arises: b) what is the role of local embeddedness in explaining the relationship between CSR and tax avoidance strategies?

At family level, as noted, the question of whether family firms exhibit more or less tax avoidance behaviors than non-family firms remains to be answered. At the same time, the concept of family heterogeneity has yielded mixed results. As our systematization highlights, this is especially the case if we look at the generational issue, which still stimulates academic debate given its ambiguous effect on tax avoidance (e.g. Temouri et al. 2022). Consequently, at least two research questions could help to examine this topic deeper. The first one implies a specific focus on “transgenerational intentions” and, overtaking the comparison between founder and non-founder firms, could be: c) what is, if any, the impact of transgenerational intention on tax avoidance? On the one hand, transgenerational intention reinforces the focus on SEW and should be negatively related to tax avoidance (behavioural agency view); on the other, transgenerational intention reinforces the need to pass on a financially prosperous business to the next generation: thus, long-term tax avoidance is increased to create wealth (family life cycle stage view). The second one is related to “generational involvement”, currently only explored as a driver of tax avoidance (Temouri et al. 2022) but can act as a contingent factor affecting the relationship between family involvement and tax avoidance, through a higher level of litigiousness (divergence from family core values) or a higher level of financial sophistication. The related question could be: d) to what extent does generational involvement moderate the relationship between family involvement and tax avoidance? This research line may be also investigated by going further into the distinction among the different societal generations, which has recently attracted scholarly attention (Cirillo et al. 2022).

Moving to the individual level, our literature review reveals that belonging to the family implies less aggressive tax strategies for leaders in family firms, especially when they exhibit an extended SEW preference attitude. At the same time, other characteristics, such as the CEO’s gender and tenure, have been shown to affect tax behaviours in family firms by reducing (or enhancing) their tendency towards tax avoidance. However, some promising individual traits remain unexplored.

First, one intriguing personal feature regards the “societal generation” of leaders as it affects firms’ strategies (Cirillo et al. 2022). Indeed, considering that each societal generation,^[3] according to the experiences they faced during their formative years, exhibits a peculiar propensity for transparency, ethical choices, and responsible behaviours (Hurrelmann and Albrecht 2021), it is important to take into account such individual features when considering leaders’ propensity for tax avoidance. Therefore, a promising research question can be: e) which generation of family leaders (e.g. Baby Boomers, X or Millennials) is more prone to engage in tax avoidance behaviour?

Similarly, recent research has increasingly focused on the relationship between religion and spirituality and business outcomes (e.g. Ernst, Bendig, and Puechel 2024), given the impact of these factors on individuals’ values and beliefs (Astrachan et al. 2020). In this context, a compelling research question at the individual level arises: f) how do leaders’ religion and spirituality influence tax decisions in family firms? Indeed, ethical (or unethical) behaviours in business, including the decision to engage in tax avoidance, are heavily influenced by an individual’s underlying principles and values (e.g. Driscoll, McIsaac, and Wiebe 2019). Surprisingly, there is currently no research exploring the role of spirituality in tax avoidance, presenting a promising avenue for further investigation both in family business and tax behaviours literature (Lei et al. 2021).

Still at this level of analysis, the role of the “CFOs”, with some exceptions (i.e. Bauweraerts et al. 2020), has been largely unexplored, although they are key decision-makers in tax planning (Chen, Chang, and Lee 2020) and can foster less aggressive tax behaviours. Indeed, thanks to their expertise in financial knowledge and understanding of tax laws and regulations, CFOs identify the best opportunities for ensuring tax (non) compliance (Campa et al. 2022). However, as our review showed, so far, scholars have only paid attention to the effect of appointing a CFO without considering his/her characteristics. A research gap is therefore individuated in the next question: g) how do CFO traits influence tax avoidance? To properly address it, characteristics such as CFO generational stage (or CFO kinship distance from founder), CFO ownership (or psychological ownership), CFO co-option with CEO might be at issue.

Finally, at context level, studies in our sample have demonstrated that the context, both cultural and institutional, within which tax avoidance occurs matters in explaining family business behaviours (e.g. Shi et al. 2023). However, some crucial aspects still deserve further attention.

First, changes in the regulatory framework within a country or differences among countries in terms of reporting practices (Brown 2020) may affect firms’ tax transparency or their propensity to engage in tax avoidance, depending on the costs and benefits involved. Therefore, an interesting research question could be the following: h) how do changes in regulatory frameworks affect tax avoidance in family firms? Indeed, while previous scholars have already demonstrated that different fiscal pressures, regulatory and penalty risks, and allowances for corporate equity affect firms’ tax behaviours (e.g. Bauweraerts and Vandernoot 2013), they fail to deepen the issue. They often examined the characteristics of a certain institutional context at a specific moment without considering changes in the regulatory framework.

Similarly, a firm’s propensity for tax avoidance is influenced by the average level of tax avoidance practised by peer firms within the same industry or geographical region (e.g. Liang et al. 2021). However, the applicability of such analyses remains largely unexplored within the domain of family business, where such variables may act as contingent factors. Consequently, an important research question arises: i) how do tax avoidance strategies in family firms respond to industry dynamics and the tax avoidance behaviours of both family and non-family peer firms?

At the same time, while authors in our sample addressed macro-cultural aspects and their implications for tax behaviours, they left out of the debate some critical issues. Among these, scholars in other fields have drawn attention to cultural diversity among people within a country (Lei et al. 2022) and national cultural characteristics among different countries (Kimea, Mkhize, and Maama 2023).

On the one hand, the variety of backgrounds among managers and employees in a firm located in a more culturally diverse environment provides a valuable resource for the company, reducing financial constraints and, consequently, the necessity to engage in tax avoidance. Second, the different propensity to take risks among managers arising from diverse cultures may influence tax avoidance, as it may be perceived as a risky choice. Last, cultural diversity diminishes the importance attributed to social norms, potentially making tax avoidance less socially constrained. Considering the different relationships that family firms have with employees (Cirillo et al. 2022) and their peculiar attitude towards risk (Gómez-Mejía et al. 2007), these aspects would acquire new nuances in family business, deserving scholarly attention.

On the contrary, national cultural dimensions, such as uncertainty avoidance or individualism (Tsakumis et al. 2007), as well as assertiveness (Bame-Aldred et al. 2013), exert a significant influence on individuals’ preferences and behaviours, affecting the decision-making process and outcomes within an organization. This mechanism holds especially true in the realm of tax avoidance: culture shapes attitudes towards tax compliance and evasion, leading to taxpayer values, which mirror those values prevalent within the social environment (Kimea, Mkhize, and Maama 2023). Given that contextual and institutional factors may have an even greater impact on family firms (Soleimanof, Rutherford, and Webb 2018), we propose this area as a promising avenue for research.

While our literature review demonstrates that some progress has been made, as scholars have begun to pay attention to contextual features, including cultural peculiarities (Shi, Hou, and Gu 2023), there are still aspects that remain in the background. Therefore, we suggest addressing the following research questions: j) how does cultural diversity affect tax behaviours in family firms? and k) how do the different national cultural dimensions impact tax avoidance in family firms?

Overall, our review retraces the difficulty of arriving at an empirical measure of tax avoidance due to a lack of a unanimous definition and its operationalization in different contexts, a reflection that also prompts us to provide a fine-grained discussion on the issue. Considering the inherent features of family firms, which we highlighted in previous sections, and that principally arise from the simultaneous (or predominant) attention to non-economic – socioemotional – goals in the decision-making process, the necessity to reach consensus and, more importantly, a tailored tax avoidance operationalization in family firms appears urgent. Indeed, our review demonstrates the despite academic effort in bringing the family-specific traits into the discussion, their results are inevitably biased by a measure of tax avoidance that is not family business-focused. Consequently, a promising research question, which embraces the above-listed issues and presents a precondition to understanding the phenomenon, could be the following: l) which corporate tax avoidance measure better fits with the specific family business behaviours?

Stemming from the results of our review and the reflections on future research opportunities in the field, this paper contributes to the literature on tax avoidance in family firms. It is the first attempt to offer a comprehensive overview of this emerging field of research, suggesting a map to identify the main studied topics organized across four levels of analysis: business, family, individual, and context. It allowed us to outline the current state of the field in a thematic overview that highlights research problems already addressed and to be addressed.

Second, the article offers scholars a detailed research agenda that might guide future studies on tax avoidance in family firms. We particularly highlight the importance of additional efforts needed at the individual level in terms of decision-makers characteristics such as societal generation, beliefs, and personal traits. Moreover, we extend the knowledge on the topic in family-owned firms and call for research to explain the (un)ethical side of tax-saving strategies. This aspect has been poorly explored in the literature, which has instead mainly focused on the concern that family owners may have to protect their affective endowment.

Finally, the table with tax avoidance measurement assessment integrates diverse perspectives and approaches towards understanding and measuring tax avoidance. From a theoretical point of view, it helps to reconcile differing viewpoints and methodologies, fostering a more holistic understanding of the concept.