Financial arrangement of female successors: a perspective from earnings management during successions in Chinese family firms

Ruoyu Weng, Shihui Chen and Qiuping Chen ()
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Ruoyu Weng: Xiamen National Accounting Institute
Shihui Chen: Ningbo University
Qiuping Chen: Xiamen National Accounting Institute

Eurasian Business Review, 2025, vol. 15, issue 1, No 10, 303-330

Abstract: Abstract This study examines the financial management arrangements of family firms during succession, using a sample of 1393 firm-year observations from 2002 to 2019 in China where the successors are descendants of the business owners. We find strong evidence that family firms with a female successor are more likely to engage in downward real earnings management in the year of succession compared to those with a male successor. The aim is to create room for increasing future annual profits. Our analysis suggests that societal perceptions of women's roles may influence their motivation to gain recognition during the succession process. Further analysis indicates that the downward earnings management by female successors is particularly pronounced when the successor possesses average capabilities or faces a challenging succession process. However, while the intention behind earnings management might be to stabilize or enhance the financial appearance during the succession period, it might not be beneficial for the long-term performance of family firms.

Keywords: Family firm; Succession; Female successor; Earnings management (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s40821-025-00290-1

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