Is the Earnings Quality of Family Businesses Better Than Non-family Businesses?

Golrida Karyawati Purba ()
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Golrida Karyawati Purba: Universitas Pelita Harapan, Indonesia Author-2-Name: Audrey Natasha Surya Author-2-Workplace-Name: Universitas Pelita Harapan, Indonesia Author-3-Name: Prem Lal Joshi Author-3-Workplace-Name: MMU Malaysia and UOB, Bahrain Author-4-Name: Anshu Tyagi Author-4-Workplace-Name: Rukmini Devi Institute of Advanced Studies, GGSIPU, New Delhi, India Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

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Abstract: " Objective - This study aims to prove whether the earnings quality of family businesses is better than non-family businesses to address two conflicting theories regarding the quality of family business earnings: agency theory and socioemotional wealth theory. Methodology/Technique - This research uses a regression model to examine the influence of family business/non-family business characteristics on earnings quality. To obtain robust results, this research measures earnings quality using 5 measurement proxies, including measurements of available opportunities for earnings management, earnings management practices, earnings persistence, earnings restatement, and investor responsiveness to earnings quality. The screening sample was carried out on firms listed on the Indonesia Stock Exchange (IDX) for the period 2016–2020, resulting in 932 research observations. Findings - Overall, this research proves that FB earnings quality is better than NFB earnings quality. The results of this study extend the implementation of socioemotional wealth theory in explaining the characteristics of FB, in which the characteristics of FB and non-FB have an impact on earnings quality. Novelty - Financial statement analysts can utilize the results of this study in interpreting earnings quality based on the characteristics of FB and NFB. Type of Paper - Empirical"

Keywords: Earnings Quality; Family Business (FB); Non-family Business (NFB); Socioemotional Wealth Theory (search for similar items in EconPapers)
JEL-codes: M41 M49 (search for similar items in EconPapers)
Pages: 18
Date: 2023-09-30
New Economics Papers: this item is included in nep-sea
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Published in Accounting and Finance Review, Volume 8, Issue 2

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Persistent link: https://EconPapers.repec.org/RePEc:gtr:gatrjs:afr226

DOI: 10.35609/afr.2023.8.2(1)

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