CEO Turnover & Earnings Management: Do Family Ties Matter?
Posted: 23 May 2013 Last revised: 3 Nov 2015
Date Written: October 10, 2014
Using a hand-collected sample of Italian family and non-family-controlled firms, we investigate the moderating effect of family ownership on the relation between earnings management and CEO turnover. Consistent with agency theory, we find a positive and significant relation between earnings management and CEO turnover in the overall sample, the association being primarily driven by non-family-controlled firms. In family-controlled firms, we find that the positive relation is reduced. Furthermore, we find the association to be insignificant in cases where the CEO is a member of the controlling family. Robustness tests rule out competing hypotheses that differences in the propensity of family and non-family firms to manage earnings and ownership concentration drive our results. Overall, this study contributes to our understanding of family ownership driven differences in corporate governance systems, a relatively unexamined topic in the literature.
Keywords: Earnings Management, CEO Turnover, Family Ownership, Corporate Governance systems
JEL Classification: G30, G32, G34, M40, M51
Suggested Citation: Suggested Citation