Do Family Firms Choose Conservative Accounting Practices?

Mehul Raithatha () and Tara Shankar Shaw ()
Additional contact information
Mehul Raithatha: Indian Institute of Management Indore, Prabandh Shikhar, Rau-Pithampur Road, Indore, Madhya Pradesh 453556, India
Tara Shankar Shaw: Indian Institute of Technology Bombay, IIT Bombay, Powai, Mumbai 400 076, Maharashtra, India

The International Journal of Accounting (TIJA), 2019, vol. 54, issue 04, 1-44

Abstract: We investigate whether family firms are motivated to adopt conservative accounting practices, given their unique characteristics of high promoter holdings, less diversified equity, and long-term interest in the business. We examine whether heterogeneity within family firms, captured through family members’ involvement in management and the firm’s affiliation to a business group, drives conservative behavior. We test our model on a sample of 2534 listed Indian firms from 2006 to 2015. Our results indicate that family-controlled firms are more conditionally conservative in their accounting practices, especially when family members manage them and when they are affiliated with a business group. These findings are robust to alternative measures of conservatism and also after controlling for omitted variable bias and reverse causality.

Keywords: Family firms; accounting conservatism; family managed; business group (search for similar items in EconPapers)
Date: 2019
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S1094406019500148
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:tijaxx:v:54:y:2019:i:04:n:s1094406019500148

Ordering information: This journal article can be ordered from

DOI: 10.1142/S1094406019500148

Access Statistics for this article

The International Journal of Accounting (TIJA) is currently edited by A. Rashad Abdel-khalik

More articles in The International Journal of Accounting (TIJA) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().