Earnings Management and Contests for Control: An Analysis of European Family Firms

21 Pages Posted: 11 Apr 2011 Last revised: 11 Mar 2012

See all articles by Mauricio Jara

Mauricio Jara

Universidad Católica de la Santísima Concepción

Félix J. López-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting; National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy

Date Written: March 1, 2011

Abstract

In this paper, the influence of large shareholders on earnings management in family-owned firms is analyzed using a sample of firms from nine European countries. How contests for control for the largest shareholder and the existence of a controlling coalition in family-owned firms affect earnings management is considered. It was found that increases in the contestability of control by the largest shareholder reduce earnings management in family-owned firms. The results also show that in firms in which the largest shareholder is a family member, a second or third family shareholder increases discretionary accruals.

Keywords: corporate control, discretionary accruals, earnings management, family firms

JEL Classification: G32, M41

Suggested Citation

Jara, Mauricio and Lopez-Iturriaga, Felix Javier, Earnings Management and Contests for Control: An Analysis of European Family Firms (March 1, 2011). Journal of CENTRUM Cathedra, Vol. 4, Issue 1, pp. 100-120, 2011. Available at SSRN: https://ssrn.com/abstract=1807171

Mauricio Jara (Contact Author)

Universidad Católica de la Santísima Concepción ( email )

Caupolicán 491
Concepción, 4070129
Chile

Felix Javier Lopez-Iturriaga

University of Valladolid - Department of Financial Economics and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

HOME PAGE: http://www2.eco.uva.es/flopez

National Research University Higher School of Economics - International Laboratory of Intangible-driven Economy ( email )

Lebedeva,27
Perm, Perm 614070
Russia

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