Abstract

This study investigates how family firms adjusted their tax strategies following Brazil’s 2023 alignment with the OECD transfer pricing guidelines, using nonfamily firms as a benchmark. The analysis adopts a blended socioemotional wealth (SEW) and implicit theory perspective, which explains family firms’ behavioral responses to institutional change by linking SEW intensity to owners’ cognitive orientations. The sample comprises 1239 firm-year observations from 177 nonfinancial companies listed on Brazil’s stock exchange between 2018 and 2024. Before the transfer pricing reform, family firms displayed a more aggressive approach to corporate income tax (CIT) minimization than their nonfamily counterparts. After the reform, only nonfamily firms, typically more internationalized, intensified their CIT minimization, indicating greater responsiveness to the new OECD-aligned rules. Family firms, by contrast, exhibited no significant change. Exploiting the new rules requires cross-border operations, which family firms tend to limit to preserve family control. With little such exposure, they were not positioned to benefit from the reform and their tax behavior remained unchanged. This inertia is consistent with an entity-oriented mindset, indirectly inferable from the firms’ muted tax response to the reform. The study contributes to family business and international taxation research by revealing that ownership structure conditions firms’ responses to regulatory change, extending the SEW–implicit theory framework to explain heterogeneous tax behavior, and offering policy insights that standardized enforcement may yield uneven outcomes across ownership types.

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