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Earnings Management in Family Firms

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Accounting Choices in Family Firms

Part of the book series: Contributions to Management Science ((MANAGEMENT SC.))

Abstract

This chapter begins the discussion about earnings quality in family firms. It examines whether family firms differently manage their earnings compared to non-family firms. We show that both from a theoretical and an empirical perspective, prior research documents show that family firms manage less their earnings relative to non-family firms. Nonetheless, we also look at deviations from these results, mainly due to the differences in the institutional environment, and/or in the management structure. Moreover, there has been a shift from the agency theory to the socioemotional wealth theory to explain family firms’ decisions with regards to earnings management. We conclude this chapter by suggesting future avenues for research, in particular in terms of theoretical framework and research design. The discussion about earnings quality continues in Chap. 4, where we investigate accounting conservatism in family firms.

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Notes

  1. 1.

    Section 3 of Chap. 2 further discusses the different definitions of family firms and the related implications concerning accounting decisions.

  2. 2.

    http://www.accountingtoday.com/opinion/art-of-accounting-how-to-overcome-the-value-disparity. Accessed on December 27, 2016.

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Authors and Affiliations

  1. Department of Economics and Management, University of Pisa, Pisa, Italy

    Silvia Ferramosca

  2. Department of Accounting, Monash University, Caulfield East, Melbourne, VIC, Australia

    Alessandro Ghio

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  1. Silvia Ferramosca
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  2. Alessandro Ghio
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Correspondence to Silvia Ferramosca .

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Ferramosca, S., Ghio, A. (2018). Earnings Management in Family Firms. In: Accounting Choices in Family Firms. Contributions to Management Science. Springer, Cham. https://doi.org/10.1007/978-3-319-73588-7_3

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