The Impact of Family Ownership and CEO Risk Traits on Tax Avoidance in Jordan: The Moderating Role of Environmental Responsibility

Abstract

This research examines the impact of family ownership and CEO risk traits on corporate tax behavior in nonfinancial firms in Jordan, with a moderating effect of environmental corporate social responsibility (ECSR). Prior studies show that governance quality affects financing costs and investment efficiency. Family-held firms navigate conflicting objectives of preserving wealth and control, and safeguarding reputation over long horizons. These priorities cause their tolerance for tax avoidance to vary significantly. CEO characteristics further influence corporate decisions: leaders willing to take risks are more likely to adopt aggressive financial and tax practices, while risk-averse leaders seek to avoid exposures that may draw regulatory scrutiny. ECSR implementation can mitigate opportunistic behavior. Environmental responsibility can complement traditional governance mechanisms by reducing tax avoidance through greater transparency, improved monitoring and stronger accountability signals. We test the proposition that ECSR moderates the relationships between family ownership, CEO risk traits and tax avoidance using panel data for 2018–2023 from firms listed on the Amman Stock Exchange. Evidence from this less-studied research setting will illustrate how adopting sustainability practices promotes more ethical behavior. Enhanced environmental disclosure and linking sustainability performance to executive compensation are expected to reduce aggressive tax planning in Jordan.