The complex role of family involvement in earnings management

Ferramosca, Silvia; Allegrini, Marco

doi:10.1016/j.jfbs.2018.01.001

Cited by 44 publications

(38 citation statements)

References 127 publications

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“…abnormal accrual). A relatively low percentage of R square is common in the research studies that have explored the EM phenomenon, as noted by Ferramosca and Allegrini (2018). However, analysis yielded a significant model with F value of 2.03, significant at the .05 level.…”

Section: Regression Resultsmentioning

confidence: 95%

“…Return on Asset (ROA) is included to capture the impact of profitability on EM. Prior studies provided evidence that companies with a high level of return on asset might be more likely to engage in EM in order to maintain profitability (Ferramosca and Allegrini, 2018;Gim et al, 2019;Sletten et al, 2018); Extreme ROA (EXROA) is used to alleviate the concern that the modified Jones model might provide biased estimates of abnormal accrual in the case of companies experiencing extreme return on asset (Dechow, et al, 1995); Age (AGE) is adopted to capture the effect of company age on EM as suggested by prior studies (Dyreng et al, 2012;Ferramosca and Allegrini, 2018). Audit Quality (BIG 4) is included to control for the effect of audit quality on EM.…”

Section: Modelmentioning

confidence: 99%

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Earnings Management in Saudi Nonfinancial Listed Companies

Shetwi¹

2020

IJBSS

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This study investigates the earnings management practices in Saudi nonfinancial listed companies. It examines the effects of IPO events, company size, and leverage on their earnings management activities. The result of the regression model revealed that Saudi nonfinancial listed companies practice earnings management, and the size of a company is negatively related to its level of earnings management. Testing using the independent-sample T-test finds the result to be robust. The finding is in line with the view that larger companies are more capable of monitoring the incentives that may lead management to exercise earnings management than smaller companies. Further, this result implies that a capital market consisting mainly of small and mid-sized companies, such as the Saudi capital market, needs to update financial rules and regulations related to financial reporting.

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Section: Regression Resultsmentioning

confidence: 95%

Section: Modelmentioning

confidence: 99%

Earnings Management in Saudi Nonfinancial Listed Companies

Shetwi¹

2020

IJBSS

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“…Astami et al (2017) investigate the role of culture and audit quality on managerial decisions regarding accounting accruals using the cross-sectional modified Jones model. The interrelationships between national culture and accounting practices were revealed also in the research of Paredes and Wheatley, (2017) and Ferramosca and Allegrini (2018). The effect of government affiliation on the performance and real earnings management on privately held enterprises was surveyed by Ding et al (2018).…”

Section: Theoretical Backgroundmentioning

confidence: 96%

Earnings management in V4 countries: the evidence of earnings smoothing and inflating

Klieštik

Belás

Valášková

et al. 2020

Economic Research-Ekonomska Istraživanja

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Earnings management is one of the most challenging, debated and controversial topics in finance and financial management. Organisational, legislative, and social norms regarding the ethics of earnings management may vary significantly, with the views of top management and economic environment playing significant roles in shaping the organisational social norm. Thus, the aim of this research is to assess if earnings management is the common practice of enterprises within V4 countries. A novel approach of the selection process to assess the ability of selected earnings management detection models was applied. To highlight discrepancies and similarities among the countries, the non-parametric alternative of analysis of variance was applied. The research confirmed that enterprises do manipulate earnings, typical is upward manipulation. Furthermore, the research unveiled the extent of manipulation with earnings in unique country samples and thus emphasised the importance of both corporate and national ethical principles and managerial decisions, which affect corporate financial reporting quality. However, it is increasingly challenging to identify various aspects and incentives which forced enterprises operating at the global level to smooth and inflate earnings to improve earnings presented in the financial statements and to misinterpret financial results.

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“…Majority family control combined with potentially fragile corporate governance structures places founding families in an extraordinarily powerful position for extracting private gains at the expense of other minority owners (Ding et al, 2007(Ding et al, , 2011. The discrepancy of results seems to indicate that the interpretation of the quality of financial information in family firms may depend on the country and other characteristics of family firms (Ferramosca & Allegrini, 2018;Gavana et al, 2017;Jara & López, 2014).…”

Section: Quality Of Financial Information and Family Firmsmentioning

confidence: 98%

El efecto de factores de gobierno corporativo en la calidad de la información financiera en empresas familiares y no familiares

Borralho

Gallardo‐Vázquez

Hernández-Linares

et al. 2020

RC-SAR

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El objetivo del estudio consiste en analizar la calidad de la información financiera de las empresas españolas, comparando las empresas familiares y las no familiares, y relacionando dicha calidad con las prácticas de gobierno corporativo. Para alcanzar este objetivo se analizó una muestra de 650 empresas españolas durante el período 2011-2016. Con base en la teoría de la agencia y en la literatura sobre la riqueza socioemocional, los resultados muestran una mayor calidad de la información financiera en las empresas familiares, relación que se ve reforzada por los factores de gobierno corporativo. Nuestros resultados son consistentes con la investigación previa y con las premisas de la teoría de agencia, que indican menores asimetrías de información entre propietarios y gestores en el singular contexto de las empresas familiares. Además, nuestro trabajo proporciona evidencia empírica de que la participación de las mujeres en el consejo de administración contribuye a la mayor calidad de la información financiera en las empresas familiares, contribuyendo a explicar la heterogeneidad de las empresas familiares en términos de gestión del resultado contable. El estudio contribuye a cubrir la brecha que existe en la literatura sobre la influencia del contexto de empresa familiar y la influencia de la presencia de las mujeres en el consejo sobre la calidad de la información financiera. The objective of this study is to explore the quality of financial information of Spanish firms, by comparing family firms with non-family firms, and relating this quality with corporate governance practices. For this purpose, a sample of 650 Spanish firms was analysed during the period 2011-2016. Based on agency theory and socioemotional wealth literature, the results show a higher quality of financial information in family firms, a relationship which is reinforced by corporate governance factors. Our results are consistent with the scant previous research, and with the premises of agency theory, which indicate lower asymmetry of information between owners and managers in the singular context of family firms. Additionally, our work provides evidence that the participation of women on the board boosts the quality of financial information in family firms, contributing to the justification of family firm heterogeneity in terms of earnings management. This study contributes to reducing the gap in the literature on the influence of the family business context and the influence of women on the board on the quality of financial reporting.

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The complex role of family involvement in earnings management

Cited by 44 publications

References 127 publications

Earnings Management in Saudi Nonfinancial Listed Companies

Earnings Management in Saudi Nonfinancial Listed Companies

Earnings management in V4 countries: the evidence of earnings smoothing and inflating

El efecto de factores de gobierno corporativo en la calidad de la información financiera en empresas familiares y no familiares

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