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The Effect of Family Ownership On Accrual-Based and Real Activities Based Earnings Management: Evidence from The French Context

Author

Listed:
  • Zeineb Feki Cherif

    (LIGUE, University of Manouba)

  • Salma Damak Ayadi

    (IHEC Carthage, University of Carthage, LIGUE, University of Manouba)

  • Saoussen Boujelben Ben Hamad

    (ESC, URAMEF, University of Sfax)

Abstract

Research Question: What is the effect of family ownership on accrual-based earnings management (ABEM) and on real earnings management (REM)? Motivation: Despite the importance and the predominance of family companies among the worldwide listed firms, there is a few study having examined earnings management in family businesses when compared to non-families ones. Their particular characteristics distinguishing them from typical public companies, family firms could provide an interesting setting for the purpose of investigating their earnings quality. Idea: Using agency theory and socio-emotional wealth (SEW) theory, we suggested and explained the impact of family ownership on earnings management. Data: We analyze a sample of French firms listed in CAC All-Tradable index in the period ranging from 2014 to 2016. Tools: We adopts the Generalized Least Squared (GLS) technique correcting heteroskedasticity and serial correlation problems related to panel data. Findings: We document that family ownership has no significant effects on ABEM, but it has a positive and significant influence on REM. In fact, this study conducted on French family firms shows that they are more involved in upward earnings management than non-family firms. Our results supports the hypothesis that family firms suffer from type II agency problems, and it can be explained by the desire to ensure the control and influence among the firm. Contributions: This study is expected to increase the understanding of the family firms’ behavior in terms of their earnings management practices building on the both agency and SEW theory.

Suggested Citation

  • Zeineb Feki Cherif & Salma Damak Ayadi & Saoussen Boujelben Ben Hamad, 2020. "The Effect of Family Ownership On Accrual-Based and Real Activities Based Earnings Management: Evidence from The French Context," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 19(2), pages 283-310, June.
    • Handle: RePEc:ami:journl:v:19:y:2020:i:2:p:283-310
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    References listed on IDEAS

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    1. Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, June.
    2. Ronald C. Anderson & David M. Reeb, 2003. "Founding‐Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1328, June.
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    Cited by:

    1. Rachael Modupe Gbadamosi & Ezekiel Alade, 2024. "Auditors’ Characteristics and Timeliness of Listed Family-Owned Firms in Nigeria," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 23(1), pages 215-236, January.
    2. Sri Murni & Rahmawati Rahmawati & Ari Kuncara Widagdo & Eko Arief Sudaryono & Doddy Setiawan, 2023. "Effect of Family Control on Earnings Management: The Role of Leverage," Risks, MDPI, vol. 11(2), pages 1-15, January.
    3. Golrida Karyawati Purba, 2023. "Is the Earnings Quality of Family Businesses Better Than Non-family Businesses? ," GATR Journals afr226, Global Academy of Training and Research (GATR) Enterprise.

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    More about this item

    Keywords

    family ownership; accrual-earnings management; real earnings management; agency problem; socio-emotional wealth;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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