CEO Turnover & Earnings Management: Do Family Ties Matter?

Posted: 23 May 2013 Last revised: 3 Nov 2015

See all articles by John Manuel Barrios

John Manuel Barrios

University of Chicago - Booth School of Business

Daniele Macciocchi

University of Utah - David Eccles School of Business

Date Written: October 10, 2014

Abstract

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

Barrios, John Manuel and Macciocchi, Daniele, CEO Turnover & Earnings Management: Do Family Ties Matter? (October 10, 2014). Available at SSRN: https://ssrn.com/abstract=2268214 or http://dx.doi.org/10.2139/ssrn.2268214

John Manuel Barrios

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Daniele Macciocchi (Contact Author)

University of Utah - David Eccles School of Business ( email )

1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States

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