“Inheritance Tax, CEO Succession, and Firm Internationalisation”

Hongryol Cha

QUB/QBS

Abstract: This research investigates the influence of inheritance tax on the internationalisation strategies of family firms during CEO succession. Family firms, crucial to business ecosystems, face unique challenges in leadership transitions, particularly under inheritance tax pressures. The dual challenges of family governance and internationalisation are not well understood. We examine how family CEOs might strategically disinternationalise their firms to reduce inheritance tax liabilities, thereby reshaping their global strategy and growth. Using the Korean database between 2015 and 2022, we analyse quantitative data on CEO succession, internationalisation patterns, and financial performance. We find a negative association between inheritance tax rates and internationalisation efforts in family firms. The paper uncovers the strategic decisions and patterns during transitions, providing a comprehensive understanding of the interplay between tax policy and corporate strategy. As such, this study will contribute to international business and corporate strategy literature, offering insights for policymakers and family business leaders.