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Earnings Management and Corporate Governance in Family Firms

Earnings management and corporate governance relationships are examined for a sample of 49 Portuguese listed firms considering an unbalanced panel for the period 2002-2017, using panel corrected standard errors models and considering the family ownership effect. Empirical findings reveal that there is a positive relationship between corporate board independence and earnings management and that the presence of women on board decreases earnings management practices. Results are consistent with the hypothesis that earnings management practices are lower in family firms than in non-family firms. Size, being audited by the Big 4 companies, return on assets, loss, and the existence of an audit committee on board influence positively earnings management, but leverage, age, and ownership control are negatively related to earnings management. Results indicate that further auditing and control is necessary for Portuguese listed companies leading to strict recommendations to be followed by policymakers regarding control of these firms.

Elisabete S. Vieira

Mara Madaleno

Publication
Book Title:
Research Anthology on Strategies for Maintaining Successful Family Firms
Year of Publication:
2021
Volume:
1
Pagination:
417-443
Identifiers
ISBN Number:
9781668435502
Other Numbers:
133538152
Alternative titles
Locators