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Family firms and earnings management in Taiwan: Influence of corporate governance

Ching Wen Chi, Ken Hung, Hui Wen Cheng and Pang Tien Lieu

International Review of Economics & Finance, 2015, vol. 36, issue C, 88-98

Abstract: This study examines the relationship between family firms and earnings management by considering the influence of board independence. Based on a sample of 379 listed high-technology firms over 7years in Taiwan, we find that family firms are positively related to earnings management. Further, we find two interaction effects: (1) the proportion of independent directors interacted with family firms to reduce the earnings management, and (2) CEO duality interacted with family firms to increase the earnings management. Our findings suggest that board independence is important for an emerging market to mitigate the earnings management behavior carried out by family firms.

Keywords: Family firms; Earnings management; Board independence; Independent director; CEO duality (search for similar items in EconPapers)
JEL-codes: G32 G34 (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1016/j.iref.2014.11.009

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