Earnings Management around Founder CEO Re-appointments and Successions in Family Firms

59 Pages Posted: 29 Aug 2019

See all articles by Marc Goergen

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Svetlana Mira

Cardiff University

Iram Fatima Ansari

Cardiff Business School, Cardiff University; College of Economics & Political Science, Sultan Qaboos University

Date Written: August 1, 2019

Abstract

This paper studies CEO re-appointment and succession events in listed family firms with an incumbent family CEO in France, Germany and the UK over 2001-2016. The paper explores whether family firms with a founder CEO are more likely to engage in earnings management pre-event than other family firms and non-family firms. Compared to non-family firms, family firms practice less upward earnings management. Nevertheless, we find evidence of pre-event upward earnings management for firms that re-appoint their founder CEO, but no such earnings management for other family firms. Finally, we also show that the new CEOs in non-family firms engage in upward earnings management after their appointment.

Keywords: earnings management, family firms, founders, socio-emotional wealth, CEO turnover, CEO successions

JEL Classification: G32, G34

Suggested Citation

Goergen, Marc and Mira, Svetlana and Ansari, Iram Fatima, Earnings Management around Founder CEO Re-appointments and Successions in Family Firms (August 1, 2019). European Corporate Governance Institute - Finance Working Paper No. 620/2019, Available at SSRN: https://ssrn.com/abstract=3433367 or http://dx.doi.org/10.2139/ssrn.3433367

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Svetlana Mira

Cardiff University ( email )

Iram Fatima Ansari

Cardiff Business School, Cardiff University ( email )

Cardiff CF10 3EU
United Kingdom

College of Economics & Political Science, Sultan Qaboos University ( email )

Al Khod, Muscat
Oman

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