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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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    More about this item

    Keywords

    Family firms; Earnings management; Board independence; Independent director; CEO duality;
    All these keywords.

    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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