Family control, accounting misstatements, and market reactions to restatements: Evidence from China

Liangbo Ma, Shiguang Ma and Gary Tian

Emerging Markets Review, 2016, vol. 28, issue C, 1-27

Abstract: We examine the impact of family control on the likelihood of accounting misstatements and on market reactions to subsequent restatements. Using a matched-firm approach, we find that family control overall reduces the incidence of misstatements, consistent with the notion that controlling families have a greater concern for reputation than nonfamily blockholders. However, compared to nonfamily firm restatements, restatements announced by family-controlled firms trigger significantly more negative market reactions. We attribute the more negative market reactions to the greater loss in reputation and higher investor scepticism of the credibility of corporate insiders for family firms than for nonfamily firms following restatements.

Keywords: Family firm; Restatement; Financial reporting; Market reaction (search for similar items in EconPapers)
JEL-codes: D8 G14 G32 M41 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:28:y:2016:i:c:p:1-27

DOI: 10.1016/j.ememar.2016.06.001

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