Download this Paper Open PDF in Browser

Family Ownership and Earnings Quality: Evidence from Different Institutional Environments

40 Pages Posted: 15 Mar 2017 Last revised: 9 Nov 2017

Stefano Mengoli

University of Bologna - Department of Management

Federica Pazzaglia

University College Dublin

Sandro Sandri

University of Bologna

Date Written: March 13, 2017

Abstract

We examine whether a country’s level of institutional development moderates the relationship between family ownership of firms and their financial reporting quality. Using a sample of family and non-family firms in 12 European countries, we find evidence of a moderating effect of institutional development. Specifically, a more developed institutional environment has a less beneficial impact on the earnings quality of family firms than that of non-family firms. Thus, family ownership and a country’s institutional environments have a substitute effect on the quality of firms’ financial reporting. Our study contributes to the literature by showing that well-developed formal institutions have a more beneficial effect on the earnings quality of non-family firms than that of family firms. We also show that informal institutions such as families have a particularly positive influence on firm behaviour in countries where formal institutions are lacking.

Suggested Citation

Mengoli, Stefano and Pazzaglia, Federica and Sandri, Sandro, Family Ownership and Earnings Quality: Evidence from Different Institutional Environments (March 13, 2017). Available at SSRN: https://ssrn.com/abstract=2932069 or http://dx.doi.org/10.2139/ssrn.2932069

Stefano Mengoli (Contact Author)

University of Bologna - Department of Management ( email )

Via Capo di Lucca, 24
http://stefanomengoli.weebly.com/
Bologna, Bologna 40132
Italy

Federica Pazzaglia

University College Dublin ( email )

Belfield, Dublin 4 4
Ireland

Sandro Sandri

University of Bologna ( email )

Piazza Scaravilli 2
Bologna, 40100
Italy

Paper statistics

Downloads
166
Rank
154,512
Abstract Views
377