Does Founding Family Control Affect Earnings Management? An Empirical Note

18 Pages Posted: 30 Sep 2007

See all articles by Pornsit Jiraporn

Pornsit Jiraporn

Pennsylvania State University - School of Graduate Professional Studies (SGPS)

Peter J. DaDalt

Susquehanna University

Date Written: February 16, 2007

Abstract

Because of concentrated ownership stakes, board composition, and longer investment horizons, founding-family controlled firms provide an interesting setting for examining issues relating to governance and control. Anderson and Reeb (2003a, 2003b, 2004), find that the founding-family controlled structure results in superior stock market and accounting performance and lower cost of debt compared to their non-family controlled counterparts. We add to their findings by examining the relationships between founding family control and earnings management. The unique characteristics of family controlled firms could insulate these firms from pressures to manage earnings. Our results support this notion, and find that family firms are significantly less likely to manage earnings.

Keywords: earnings management, family firms, family-owned

JEL Classification: G30, G32, G34

Suggested Citation

Jiraporn, Pornsit and DaDalt, Peter J., Does Founding Family Control Affect Earnings Management? An Empirical Note (February 16, 2007). Available at SSRN: https://ssrn.com/abstract=1017856 or http://dx.doi.org/10.2139/ssrn.1017856

Pornsit Jiraporn (Contact Author)

Pennsylvania State University - School of Graduate Professional Studies (SGPS) ( email )

30 E. Swedesford Road
Malvern, PA 19355
United States
(484) 753-3655 (Phone)

HOME PAGE: http://www.personal.psu.edu/pxj11/index1.html

Peter J. DaDalt

Susquehanna University ( email )

Selinsgrove, PA 17870
United States
5703724524 (Phone)

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