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Abstract:
Family firms are an important phenomenon of the German capital market. We analyse the broadest market segment of the German Stock Exchange, the CDAX, for the years 1998 to 2008. According to a founding-family definition almost half of all CDAX-listed non-financial firms in Germany can be classified as family firms. They also represent about one third of all listed non-financial firms' market capitalization. Within these firms the founding family is not only the most important shareholder but also participates actively in most of the boards (management and supervisory board). In about 50% of all family firms the founder also serves as CEO. Family firms are smaller, younger and have higher equity ratios compared to their non-family counterparts. They are represented in all industries with a certain concentration in the services sectors. We confirm and extend previous evidence by Jaskiewicz (2006) and Andres (2008) that family ownership and management has a positive impact on a firm's operating performance. Our analysis of stock market performance provides evidence that family firms are more sensitive to market movements compared to non-family firms.

family firms, Germany, performance

Abstract:
True and fair view accounting standards are commonly considered to be the main driver of high accounting quality (i.e. Levitt, 1998). However, previous studies have found that high quality standards are a necessary but not a sufficient condition for high quality financial reporting (i.e. Ball et al. 2003; Leuz et al., 2003; Van Tendeloo/Vanstraelen, 2005). Germany provides an ideal natural experiment to examine whether incentives or standards drive earnings quality in a bank-based economy. This paper contributes to the actual discussion on accounting harmonization in several ways. Using a sample of listed German firms in the period from 1998 to 2008, this is the first study that analyses effects of ownership structures on the decision to voluntarily adopt IFRS. We show that the possibility to access company information via private information channels determined voluntary IFRS adoption and that IFRS did not overcome equity home bias in Germany. Our analysis of changes in earnings quality between the pre and the post adoption period shows that earnings quality mainly improved for voluntary but not for mandatory IFRS adopters. Analysing this phenomenon from a corporate governance perspective provides evidence that the aim to reduce insider ownership is one of the incentives to voluntarily adopt IFRS and thereby improve earnings quality under voluntary IFRS adoption. This is consistent with previous evidence that not standards per se but incentives are main drivers of accounting quality.

IAS regulation, IFRS, corporate ownership structures, insider ownership, incentives, earnings quality

Abstract:
This paper examines the level of de facto convergence of IFRSs and US GAAP based on Form 20-F reconciliations of 114 EU companies. Our analysis of 1.928 reconciling items illustrates that de facto differences between IFRSs and US GAAP are heterogeneous and often material in both net income and shareholder's equity. Particularly, adjustments for business combinations, intangibles and pensions are predominant. We find significant differences between numerical adjustments (1) of first-time adopters and non-first-time adopters of IFRSs, (2) of companies in the financial and non-financial sector, and (3) of companies domiciled in common law and code law countries with each former group tending to larger adjustments. This implies that adoption effects and institutional factors impact the amount of adjustments. Our overall results indicate a poor level of de facto convergence achieved to date and an inconsistent application of accounting standards. Particularly, results imply earlier profit recognition under US GAAP and more conservative accounting under IFRSs, which are more prevalent in common law countries than in code law countries.

accounting convergence, cross listing, Form 20-F, IFRSs, reconciliation, U.S. GAAP