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Articles

Earnings management in family versus non-family firms: the influence of analyst coverage

Manipulación de resultados en las empresas familiares frente a las no familiares: la influencia de la cobertura de los analistas

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Pages 113-133 | Received 07 Nov 2015, Accepted 09 Apr 2018, Published online: 25 Apr 2018
 

ABSTRACT

This study investigates the relationship between the level of earnings management in family and non-family firms and analyses whether or not this relationship depends on the level of the monitoring effect from analysts. The empirical study relies on a sample of 1,043 UK-listed firms. We find that family firms have higher levels of earnings management as compared to non-family firms, unless they are followed by a significant number of analysts. This study fills a gap in the literature by suggesting that not all family firms should be considered the same when addressing incentives for earnings management. It also highlights the moderator effect of the analyst coverage in the relationship between the family status and earnings management.

RESUMEN

Este estudio investiga la relación entre el nivel de manipulación de resultados en empresas familiares y no familiares, y analiza si esta relación depende del nivel de supervisión de los analistas. El estudio empírico se basa en una muestra de 1.043 empresas cotizadas en el Reino Unido. Encontramos que las empresas familiares tienen niveles más altos de manipulación de resultados en comparación con las empresas no familiares, a menos que sean seguidas por un número significativo de analistas. Este estudio llena un vacío en la literatura al sugerir que no todas las empresas familiares deben ser consideradas iguales cuando se trata de incentivos para la manipulación de resultados. También resalta el efecto moderador de la cobertura del analista en la relación entre el estatus familiar y la manipulación de resultados.

JEL CLASSIFICATION:

Acknowledgements

We thank Professor Louise Scholes from University of Nottingham Business School for her very valuable support with the financial databases. We also acknowledge the constructive comments from delegates at the 36th annual Congress of European Accounting Association (Paris, May 2013).

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by the FCT [Research Project UID/GES/00315/2013].

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