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

Author

Listed:
  • Chi, Ching Wen
  • Hung, Ken
  • Cheng, Hui Wen
  • Tien Lieu, Pang

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.

Suggested Citation

  • Chi, Ching Wen & Hung, Ken & Cheng, Hui Wen & Tien Lieu, Pang, 2015. "Family firms and earnings management in Taiwan: Influence of corporate governance," International Review of Economics & Finance, Elsevier, vol. 36(C), pages 88-98.
  • Handle: RePEc:eee:reveco:v:36:y:2015:i:c:p:88-98
    DOI: 10.1016/j.iref.2014.11.009
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    Cited by:

    1. Chen, Tsung-Kang, 2016. "Does geography matter in a geographically small and culturally homogeneous country? Firm location and corporate credit risk," International Review of Economics & Finance, Elsevier, vol. 44(C), pages 323-348.
    2. repec:gam:jsusta:v:9:y:2017:i:12:p:2327-:d:122754 is not listed on IDEAS
    3. repec:eee:reveco:v:50:y:2017:i:c:p:175-195 is not listed on IDEAS
    4. Huang, Paoyu & Ni, Yensen, 2017. "Board structure and stock price informativeness in terms of moving average rules," The Quarterly Review of Economics and Finance, Elsevier, vol. 63(C), pages 161-169.
    5. repec:pdc:jrnbeh:v:14:y:2018:i:2:p:342-354 is not listed on IDEAS
    6. Lo, Huai-Chun & Ting, Irene Wei Kiong & Kweh, Qian Long & Yang, Ming Jing, 2016. "Nonlinear association between ownership concentration and leverage: The role of family control," International Review of Financial Analysis, Elsevier, vol. 46(C), pages 113-123.
    7. repec:eee:reveco:v:51:y:2017:i:c:p:82-98 is not listed on IDEAS
    8. repec:eee:fambus:v:8:y:2017:i:4:p:237-247 is not listed on IDEAS

    More about this item

    Keywords

    Family firms; Earnings management; Board independence; Independent director; CEO duality;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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