Accounting Choices in Family Firms pp 139-164 | Cite as
Accounting Conservatism in Family Firms
Abstract
This chapter examines another relevant earnings quality in family firms, namely accounting conservatism. We argue that family businesses differ from non-family firms with regard to accounting conservatism due to their long-term investment horizon as well as the importance they place on non-economic factors. In this chapter we first discuss the notion of accounting conservatism, and more specifically of conditional conservatism. We then show that family firms, on average, exhibit higher accounting conservatism than non-family firms. We observe variability in the results due to the differences in the institutional environment, and in the management structure. We corroborate our findings by extending the notion of accounting conservatism. We thus affirm that family firms tend to be less tax-aggressive than non-family firms. Finally, we provide numerous research avenues regarding accounting conservatism in family firms.
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