Financial Reporting Practices of Family Firms

✍ Scribed by Yen H. Tong

• Book ID: 104345599
• Publisher: Elsevier Science
• Year: 2007
• Tongue: English
• Weight: 228 KB
• Volume: 23
• Category: Article
• ISSN: 0882-6110
• DOI: 10.1016/s0882-6110(07)23009-3

✦ Synopsis

This paper investigates whether the financial reporting practices of family firms differ from non-family firms. Results indicate family firms have lower absolute discretionary accruals, report fewer small positive earnings surprises compared to non-family firms, have more informative earnings and have less earnings restatements relative to non-family firms. Overall, the findings indicate that the financial reporting practices of family firms are of better quality than those of non-family firms. Better quality financial reporting practices in family firms is consistent with a long-run investment horizon, reputation concerns and better monitoring of managers, and is indicative of less opportunistic rent extraction.