Ownership and Liability Decision

Traditionally, accounting remains focused on the actions of the firm and ignores the effects of the firm upon its external environment. However, a growing number of researchers have accepted that several effects of the firm influence the external environment and have suggested that one of the roles of accounting should be to report the impact of the firm in this respect. This paper researches the effect of ownership on the liability decision concerning the increase of the knowledge on the accounting literature. The methodology has two different frameworks. First, the literature review shows, on the one hand, evidence of ownership separate by nonfamily versus family owned firms to adopt an individualistic identity orientation, so they are motivated to firm self-interest and focus on financial performance (Bingham et al., J Bus Ethics 99:565–585, 2010). On the other hand, the liability decision making process focus on those family members that have the family as main shareholders of the firm (Agarwal and Nagarajan, J Financ 45(9):1325–1331, 1990; Anderson and Reeb, J Financ 58(3):1301–1328, 2003; Admin Sci Q 49(2):209–227, 2004; Gómez-Mejía et al., Admin Sci Q 53(1):106–137, 2007; Oro et al., Congresso Brasileiro de Contabilidade, 15–17, 2008, and Puerto, Corporate governance in family firms, effects of family control and corporate financial decisions. Universidad de Salamanca, 2010). Second, the empirical analysis is a longitudinal exploratory analysis based on sample of 281 firms with shares listed on Bovespa Stock Exchange (São Paulo, Brazil). The accounting information was collected from database Economática®, from which classification is given to managers, controllers and family. Also, a series of hypotheses were prepared, which, were tested, having I mind the proposed relationship between liability and each firm of the sample. The author used was Benford law-based analysis, because it produces strong support for the research hypothesis. The main results show the understanding of the liability decision in the context of family owned and nonfamily owned firms. Also, as an exploratory result, there is heterogeneity performing on the function of a standard of comparison and the test of the multivariate differences among firms which reflect events occurring in an identical period with consequences in similarity of the business. Enthusiastically, it is observed that a firm can have a very significant effect upon its external image. Actually, it changes the liability decision through its activities. Also, it can be seen that these different effects, in some circumstances, are viewed as beneficial or as detrimental to the accountability of the firm.