1.05. Earnings management and ownership structure: An international analysis of family firms

revista MBR

Autores: M. Jara-Bertin, F. López-Iturriaga.


Using a sample of 590 listed firms from the USA, Canada, the UK, France, Spain and Italy, we find that earnings management is more severe in family owned firms than in non-family owned firms. This result depends on the institutional environment, being earnings more managed in the countries with worse investors’ legal protection. Although ownership concentration reduces earnings management in nonfamily firms, the opposite holds in family firms.

In addition, the more challenge to the control of dominant shareholders, the less earnings management in family firms. Finally, we find that the nature of the blockholders can also be relevant: a bank or institutional investor as second reference shareholder in family firms can help to alleviate the problem of earnings management.


Keywords: earnings management, family firms, institutional environment, ownership structure.