Family Control, Board Independence and Earnings Management: Evidence Based on Hong Kong Firms

Posted: 15 Jun 2009

See all articles by Bikki Jaggi

Bikki Jaggi

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick

Sidney Leung

City University of Hong Kong (CityUHK) - Department of Accountancy

Ferdinand A. Gul

Monash University Sunway Campus

Date Written: 2009

Abstract

In this study, we document that independent corporate boards of Hong Kong firms provide effective monitoring of earnings management, which suggests that despite differences in institutional environments, corporate board independence is important to ensure high quality financial reporting. The findings also show that the monitoring effectiveness of corporate boards is moderated in family-controlled firms, either through ownership concentration or the presence of family members on corporate boards. The results based on firms reporting small earnings increases provide additional support for our finding that the monitoring effectiveness of independent corporate boards is moderated in family-controlled firms.

Keywords: Corporate governance, earnings management, earnings quality, family ownership, family board control

JEL Classification: G32, G34, M41

Suggested Citation

Jaggi, Bikki and Leung, Sidney and Gul, Ferdinand A., Family Control, Board Independence and Earnings Management: Evidence Based on Hong Kong Firms (2009). Journal of Accounting and Public Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1418420

Bikki Jaggi

Rutgers, The State University of New Jersey - Rutgers Business School at Newark & New Brunswick ( email )

100B Rockafeller Road
Piscataway, NJ 08854
United States

Sidney Leung (Contact Author)

City University of Hong Kong (CityUHK) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China
+852 2788-7924 (Phone)
+852 2788-7944 (Fax)

Ferdinand A. Gul

Monash University Sunway Campus ( email )

Jalan Lagoon Selatan
Selangor Darul Ehsan
Bandar Sunway, 46150
Malaysia

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