Economics at your fingertips  

The impact of family influence on financial reporting quality in small and medium family firms

Antonio Duréndez and Madrid-Guijarro, Antonia

Journal of Family Business Strategy, 2018, vol. 9, issue 3, 205-218

Abstract: In this study, we investigate whether accounting information quality is affected by the special characteristics of small- and medium-sized family firms. These companies have a particular power and management structure and different stockholder interests, compared to large companies. We go a step further than prior literature and use a multidimensional approach based on the Family Influence on Power, Experience, and Culture (F-PEC) scale to assess heterogeneity among family firms. Additionally, we develop a comprehensive approach that considers discretional accruals, real earnings, and accounting information quality measurements such as conservatism and earnings persistence. Our findings, based on a sample of 252 small- and medium-sized Spanish family manufacturing firms, show that the ‘Power’ dimension decreases the quality of financial reporting, whereas ‘Experience’ promotes earnings persistence and conservatism; finally, ‘Culture’ curbs earnings management in terms of real earnings and favours both earnings persistence and conservatism. Consequently, according to our results, family businesses that resemble our sample firms should promote family involvement in terms of culture and experience, while limiting power inside the company.

Keywords: Family firms; Family influence; Financial reporting; Earnings management; F-PEC (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

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:

Ordering information: This journal article can be ordered from
http://www.elsevier. ... 719791/bibliographic

Access Statistics for this article

Journal of Family Business Strategy is currently edited by J.H. Astrachan

More articles in Journal of Family Business Strategy from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2018-12-08
Handle: RePEc:eee:fambus:v:9:y:2018:i:3:p:205-218