Controlling generation of family firms and earnings management in Indonesia: The role of accounting experts of audit committees

Suprianto, Edy; Rahmawati, Rahmawati; Setiawan, Doddy; Aryani, Y. Anni

doi:10.14254/2071-8330.2019/12-3/21

Cited by 14 publications

(15 citation statements)

References 39 publications

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“…The interests of families are closely related to the interests of the business, so that they would not be prone to managing earnings to avoid possible damage to the survival of the company and its reputation (Salvato and Moores, 2010;Borralho et al, 2020). Family firms who value SEW to a larger extent tend to avoid EM, which, if detected, would damage the reputation of the company and the family, putting at risk the survival of the firm for subsequent generations (Suprianto et al, 2019;Martin et al, 2016). Moreover, long-term focus limits pressure on a firm's management to achieve short-term performance goals, reducing the incentives for EM (Jiraporn and DaDalt, 2009).…”

Section: Earnings Management Rpts and Family Firmsmentioning

confidence: 99%

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Related party transactions and earnings management in family firms: the moderating role of board characteristics

Gavana

Gottardo

Moisello

2022

JFBM

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PurposeThe purpose of this paper is to investigate the effect of family control on the association between related party transactions (RPTs) and different forms of accrual-based earnings management (AEM) and real earnings management (REM), analyzing the effect of board characteristics on the possible association.Design/methodology/approachThis paper studies a sample of Italian non-financial listed firms over the 2014–2019 period, by GLS regression models, controlling for the fixed effects of the company's sector of operation and the year.FindingsResults indicate a different association between RPTs and earnings management (EM) in family and non-family firms. They point out that family firms use RPTs in association with downward AEM and REM perpetrated by abnormal discretionary expenses as well as a substitute of REM via abnormal production costs. For non-family firms, findings indicate only a substitution effect between RPTs and AEM. Furthermore, CEO duality, board gender diversity and the presence of the family on the board positively moderate the association between RPTs and, respectively, REM implemented through sales manipulations, downward AEM and upward AEM.Originality/valueThis study suggests that the socioemotional wealth (SEW) differently affects the relationship between RPTs and EM, according to the form of the latter. It also points out family firms' heterogeneity in earnings manipulations, by providing evidence of the moderating role of board characteristics on the association between RPTs and the various forms of EM.

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Section: Earnings Management Rpts and Family Firmsmentioning

confidence: 99%

“…, 2020). Family firms who value SEW to a larger extent tend to avoid EM, which, if detected, would damage the reputation of the company and the family, putting at risk the survival of the firm for subsequent generations (Suprianto et al. , 2019; Martin et al.…”

Section: Theoretical Framework Literature Review and Hypotheses Devel...mentioning

confidence: 99%

Related party transactions and earnings management in family firms: the moderating role of board characteristics

Gavana

Gottardo

Moisello

2022

JFBM

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“…One of the unique characteristics of family companies is the emotional bond between family members who run the business (G omez-Mej ıa et al, 2007). Furthermore, a study by Suprianto et al (2019) found that family companies tend to maintain the good name of the family and focus on achieving company performance. Therefore, we believe that in non-family firms, accounting conservatism tends to affect the value relevance of the firm compared with family firms.…”

Section: Institutional Ownership and Value Relevancementioning

confidence: 99%

View of institutional ownership and value relevance in Indonesia: the nexus of accounting conservatism

Muslim,

Setiawan

2024

RAMJ

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PurposeOur study aims to explore the ownership structure and accounting conservatism in influencing the value relevance that we analyse through the paradigm of open innovation and socio-emotional wealth (SEW). We also extended the test to identify how firm size could affect value relevance.Design/methodology/approachThrough panel data testing, we collected all issuers on the stock exchange for the 2016–2018 period. The total collected observations are 735 observations from various industries.FindingsThe results of the study provide empirical evidence that institutional ownership is more pronounce, especially in companies with high asset levels. We also conducted other tests to see it from the perspective of SEW. We divide companies into family and non-family companies. The results of this study indicate that institutional ownership has an effect on increasing value relevance, especially in family companies compared with non-family companies. The results of the study also indicate that accounting conservatism plays a more important role in increasing value relevance in non-family firms compared to family firms.Originality/valueThis study advances in two main ways. First, we use a SEW approach and an open innovation perspective. Second, we conducted tests for family and non-family firms.

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“…One explanation for these mixed findings is the agency costs incurred by the controlling shareholders (Lewellyn & Bao, 2021). The controlling shareholders of a family business tend to influence the actions and decisions of the managers (Brahmana, Setiawan, & Hooy, 2019;Setiawan, Aryani, Yuniarti, & Brahmana, 2019;Suprianto, Rahmawati, Setiawan, & Aryani, 2019), causing the managers to invest in low-return projects (Anderson et al, 2012;Choi et al, 2015;Brahmana et al, 2019;Yıldız et al, 2021).…”

Section: Moderating Role Of Controlling Shareholder On the Constraint...mentioning

confidence: 99%

Cash Holdings and R&D Intensity with Different Controlling Shareholders

Setiawan

Kontesa

Soo

2023

JIEB

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Introduction/Main Objectives: This research aims to examine the effects of cash holdings on a firm’s R&D intensity. We further examine how that relationship may be varied across different controlling shareholders. For robustness reasons, we test it in a developing market and a developed market. Background Problems: Economics and business theories state that research and development (R&D) is susceptible to financing constraints due to the lack of collateral value and asymmetric information issues. This argument has been extensively debated with no consensus being reached. Therefore current study focuses on the examination of R&D and cash holding and the role of controlling shareholders. Novelty: The current study considers the importance of controlling shareholders on the relationship between cash holding and R&D intensity. We expect that different controlling shareholders will have different constraints on R&D financing. Research Methods: This study focuses on a sample of public listed companies in Malaysia and Singapore from the year 2012 to 2018, and estimates the model under a two-step GMM panel regression to eliminate the endogeneity issue. Finding/Results: The results show that cash holdings have significant effects on the intensity of R&D. However, that relationship is different across countries and across controlling shareholders. Malaysia’s foreign firms will increase their R&D’s intensity when their cash holdings are high. Meanwhile, Singaporean family firms will reduce the intensity of their R&D when their cash holdings are high. Overall the findings confirm the hypothetical alignment of the agency theory and also the resource-based view theory. Conclusion: Our findings surmise that higher cash holdings cause a lower R&D intensity due to the cash management decisions by managers. A firm with high leverage tends to reduce its R&D intensity when cash holdings are high, and vice versa. This behavior can be found in all the controlling shareholders.

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Controlling generation of family firms and earnings management in Indonesia: The role of accounting experts of audit committees

Cited by 14 publications

References 39 publications

Related party transactions and earnings management in family firms: the moderating role of board characteristics

Related party transactions and earnings management in family firms: the moderating role of board characteristics

View of institutional ownership and value relevance in Indonesia: the nexus of accounting conservatism

Cash Holdings and R&D Intensity with Different Controlling Shareholders

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