scholarly journals The influence of family board involvement on earnings management

2021 ◽  
Vol 18 (2) ◽  
pp. 106-123
Author(s):  
Fabio Franzoi ◽  
Mark Mietzner ◽  
Franziska Thelemann
Keyword(s):  
Earnings Management ◽  
Family Involvement ◽  
Family Firms ◽  
Management Practices ◽  
Real Earnings Management ◽  
Family Management ◽  
Family Ownership ◽  
Executive Board ◽  
Listed Firms ◽  
Founding Family

This study explores the influence of family ownership and family board involvement on earnings management in German-listed firms. We extend existing research by applying a more precise measurement of family involvement that offers new insights into a family’s effect on earnings management behaviour. Our models suggest that the degree of management involvement of families is a significant driver of earnings management, a factor disregarded so far in the literature. Furthermore, the distinction between founding family and family ownership should be carefully considered. Employing a sample of 278 firms from 2000-2013, we find that greater family management presence on the executive board is associated with more earnings-decreasing accrual-based earnings management practices and more real earnings management activities via discretionary expenses. This is viewed as less value-destroying REM activity to meet earning targets. Overall, German family firms seem to use their powerful positions as shareholders and executive board members to expropriate shareholders and manage earnings to meet targets while maintaining family wealth

Earnings Management and Corporate Governance in Family Firms

2019 ◽  
pp. 127-153
Author(s):  
Elisabete Vieira ◽  
Mara Madaleno
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Family Firms ◽  
Management Practices ◽  
Corporate Board ◽  
Listed Firms ◽  
Big 4 ◽  
Ownership Effect ◽  
And Control

Earnings management and corporate governance relationships are examined for a sample of 49 Portuguese listed firms considering an unbalanced panel for the period 2002-2017, using panel corrected standard errors models and considering the family ownership effect. Empirical findings reveal that there is a positive relationship between corporate board independence and earnings management and that the presence of women on board decreases earnings management practices. Results are consistent with the hypothesis that earnings management practices are lower in family firms than in non-family firms. Size, being audited by the Big 4 companies, return on assets, loss, and the existence of an audit committee on board influence positively earnings management, but leverage, age, and ownership control are negatively related to earnings management. Results indicate that further auditing and control is necessary for Portuguese listed companies leading to strict recommendations to be followed by policymakers regarding control of these firms.

scholarly journals Diversified, integrated and cross-border acquisitions and firm performance: A comparison of family and non-family Italian listed firms

2018 ◽  
Vol 16 (1) ◽  
pp. 72-86 ◽  
Author(s):  
Fabio La Rosa ◽  
Francesca Bernini ◽  
Giovanna Mariani
Keyword(s):  
Family Involvement ◽  
Family Firms ◽  
Global Financial Crisis ◽  
Target Selection ◽  
Family Ownership ◽  
Listed Firms ◽  
And Performance ◽  
The Global Financial Crisis ◽  
External Growth

In family firms, the principal-agent relationship and the steward role of family managers are determinants for external growth and acquisition target selection. In fact, some acquisitions are better for the family’s need for risk reduction and company preservation. We aim to verify if family involvement in ownership and management influences firms’ acquisition propensity, type of strategy, and post-deal performance. We develop an empirical analysis for a sample of 141 Italian listed companies during 2005–2011, which includes the global financial crisis. Our results reveal that Italian listed family firms have lower acquisition propensity than non-family firms because of family involvement in ownership and executive committees. Especially, diversifying strategies are less pursued by family firms, and this is corroborated when family ownership increases. However, while family firms do not differ from non-family firms on post-acquisition performance, a moderating role of family firms and family ownership does exist for diversified acquisitions and performance.

Effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia

2019 ◽  
Vol 10 (1) ◽  
pp. 74-99 ◽  
Author(s):  
Wan Masliza Wan Mohammad ◽  
Shaista Wasiuzzaman
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Family Firms ◽  
Family Ownership ◽  
Content Type ◽  
Listed Firms ◽  
Panel Data Regression ◽  
Effect Theory ◽  
History Of

Purpose The purpose of this paper is to investigate the effect of audit committee independence, board ethnicity and family ownership on earnings management in Malaysia. Design/methodology/approach The effect of audit committee independence, board ethnicity and family ownership on corporate governance is investigated via 1,206 firm-year observations between the fiscal years of 2004 and 2009 of Bursa Malaysia listed firms. Panel data regression analysis is used to analyze the relationship. Findings The findings of this study fail to associate the role of audit committee independence as proposed under RMCCG (2007) in curtailing earnings management activities, thus supporting the findings on power distance scores that power granted to the top management may result in less effective independent directors. Nonetheless, in support of the alignment effect theory, family ownership is found to reduce earnings management activities. The findings show that corporate governance is more effective in developing country family firms due to their long history of family reputation and the importance of institutional culture factors. Research limitations/implications This study focuses on board ethnicity, family ownership and its influence on earnings management. Originality/value This study offers insights into the importance of family institutional structures on corporate governance reforms in Malaysia as Malaysian family firms are mostly traditional firms that have built their reputation and strength in the industry for many generations.

Earnings Management and Corporate Governance in Family Firms

2022 ◽  
pp. 417-443
Author(s):  
Elisabete Vieira ◽  
Mara Madaleno
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Audit Committee ◽  
Family Firms ◽  
Management Practices ◽  
Corporate Board ◽  
Listed Firms ◽  
Big 4 ◽  
Ownership Effect ◽  
And Control

Earnings management and corporate governance relationships are examined for a sample of 49 Portuguese listed firms considering an unbalanced panel for the period 2002-2017, using panel corrected standard errors models and considering the family ownership effect. Empirical findings reveal that there is a positive relationship between corporate board independence and earnings management and that the presence of women on board decreases earnings management practices. Results are consistent with the hypothesis that earnings management practices are lower in family firms than in non-family firms. Size, being audited by the Big 4 companies, return on assets, loss, and the existence of an audit committee on board influence positively earnings management, but leverage, age, and ownership control are negatively related to earnings management. Results indicate that further auditing and control is necessary for Portuguese listed companies leading to strict recommendations to be followed by policymakers regarding control of these firms.

scholarly journals Corporate Governance, Audit Quality, Family Ownership and Earnings Management

2021 ◽  
Author(s):  
Ari Kuncara Widagdo ◽  
Rahmawati Rahmawati ◽  
Sri Murni ◽  
Trisninik Ratih Wulandari ◽  
Sri Wahyu Agustiningsih
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Information Asymmetry ◽  
Family Firms ◽  
Management Practices ◽  
Audit Quality ◽  
Stock Exchange ◽  
Family Ownership ◽  
Manufacturing Companies ◽  
Management Actions

This study aimed to obtain empirical evidence regarding the influence of corporate governance and audit quality on earnings management measures, as well as their relationship with the effect of family ownership. Research on earnings management has been widely conducted, but research in family firms is still limited, while based on previous observational data, 95% of companies in Indonesia are family firms. In addition, the difference in the concept of corporate governance in developing countries compared to developed countries is crucial in relation to company supervision patterns. Earnings management practices carried out by company management can be caused by the occurrence of information asymmetry in which management as an agent has more information related to the company than the company owner. This information asymmetry is used by managers to mislead other parties with the aim of increasing their managerial career or compensation. Implementing the corporate governance mechanism is a way to reduce earnings management. Another factor affecting earnings quality is audit quality. This study took a sample of manufacturing companies listed on the Indonesian Stock Exchange during the 2017- 2018 period. 152 sample data were tested. This study used secondary data obtained from annual reports of companies listed on the Indonesian Stock Exchange. Moderated regression analysis (MRA) was used. Corporate governance had no effect on earnings management and audit quality had a significant effect on earnings management behavior. Family ownership was able to strengthen the effect of audit quality in determining earnings management actions. Keywords: corporate governance, audit quality, earnings management, family ownership

scholarly journals PENGARUH CSR TERHADAP NILAI PERUSAHAAN: INTEGRASI MANAJEMEN LABA SEBAGAI MEDIASI DAN KEPEMILIKAN KELUARGA SEBAGAI MODERASI

2021 ◽  
Vol 8 (1) ◽  
pp. 1
Author(s):  
Stacia Senjaya ◽  
Fransiskus Randa ◽  
Ferdinandus Sampe
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Family Firms ◽  
Management Practices ◽  
Stock Exchange ◽  
Annual Reports ◽  
Family Ownership ◽  
Financial Reports ◽  
The Impact ◽  
The Relationship

<p><em>The purpose of this study is to investigate the role of family ownership integration in moderating and earnings management in mediating the relationship between CSR and firm value. The population used is all companies listed on the Indonesia Stock Exchange (BEI) with the 2015-2018 research period. The number of samples is 67 companies each year, which were selected by purposive sampling method. This study uses documentary data, namely annual reports and financial reports. Path analysis is used to analyze data. The results of this study indicate that CSR has a significant positive effect on earnings management, also earnings management on firm value has a significant positive relationship. The family ownership variable in moderates the relationship between CSR and earnings management is type Pure Moderation, conversely earnings management in mediating the relationship between CSR to the firm's value is type of No Mediation, nor is there any effect of integration of family ownership and earnings management on the relationship of CSR and firm value. The implication of this research, especially for family firms to maintain control of the company's operations, especially in the socio-emotional aspect compared to the financial aspect, because this contributes stakeholder to avoid the impact of earning management practices with the higher the discretionary accrual value is indicated to hide actions that harm firm’s reputation.</em></p>

Corporate Social Responsibility and Earnings Management: The Moderating Role of Family Ownership

2019 ◽  
Vol 12 (1) ◽  
Author(s):  
Asif Saeed ◽  
Aijaz Mustafa Hashmi ◽  
Attiya Yasmin Javid
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Family Firms ◽  
Negative Impact ◽  
Stock Exchange ◽  
Least Square ◽  
Family Ownership ◽  
Corporate Social ◽  
The Impact

This study aims to explore the impact of family ownership on the relationship among corporate social responsibility (CSR) and earning management (EM) in Pakistan. Data is collected from nonfinancial listed firms on Pakistan Stock Exchange (PSE) for the period 2009-2017. Our results of pooled ordinary least square regression indicate that CSR has significant negative impact on EM. Furthermore, results also indicate that association between CSR and EM is moderated by family ownership. Family firms which perform CSR activities are less involved in EM as compare to nonfamily firms perform CSR activities. This variation in behavior of EM in family and non-family firms can possibly be explained by socioemotional wealth theory. Keywords: Corporate Social Responsibility, Earnings Management, Family Ownership

Financial Distress, Earnings Benchmark and Earnings Management Practices

2021 ◽  
pp. 097226292110109
Author(s):  
Karan Gandhi
Keyword(s):  
Panel Data ◽  
Earnings Management ◽  
Financial Distress ◽  
Management Practices ◽  
Real Earnings Management ◽  
Public Companies ◽  
Large Panel ◽  
Distressed Firms ◽  
Contradictory Evidence ◽  
Financially Distressed

Prior research exhibits contradictory evidence on earnings management practices, both accrual and real, undertaken by the firms in state of financial distress. This study uniquely examines the issue in the presence of earnings-increasing earnings management motivation- meeting earnings benchmark of avoiding losses. For examining the issue, this study analyzes large panel data of Indian public companies for the period 2000–2016. The findings indicate prevalence of earnings-decreasing real earnings management practices, that is, decrease in overproduction and increase in spending on discretionary expenses, in financially distressed firms despite there being motivation to increase earnings to avoid losses. No evidence of accrual earnings management practices has been observed in such firms.

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