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Is the Earnings Quality of Family Businesses Better Than Non-family Businesses?

Author

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  • Golrida Karyawati Purba

    (Universitas Pelita Harapan, Indonesia Author-2-Name: Audrey Natasha Surya Author-2-Workplace-Name: Universitas Pelita Harapan, Indonesia Author-3-Name: Prem Lal Joshi Author-3-Workplace-Name: MMU Malaysia and UOB, Bahrain Author-4-Name: Anshu Tyagi Author-4-Workplace-Name: Rukmini Devi Institute of Advanced Studies, GGSIPU, New Delhi, India Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

" Objective - This study aims to prove whether the earnings quality of family businesses is better than non-family businesses to address two conflicting theories regarding the quality of family business earnings: agency theory and socioemotional wealth theory. Methodology/Technique - This research uses a regression model to examine the influence of family business/non-family business characteristics on earnings quality. To obtain robust results, this research measures earnings quality using 5 measurement proxies, including measurements of available opportunities for earnings management, earnings management practices, earnings persistence, earnings restatement, and investor responsiveness to earnings quality. The screening sample was carried out on firms listed on the Indonesia Stock Exchange (IDX) for the period 2016–2020, resulting in 932 research observations. Findings - Overall, this research proves that FB earnings quality is better than NFB earnings quality. The results of this study extend the implementation of socioemotional wealth theory in explaining the characteristics of FB, in which the characteristics of FB and non-FB have an impact on earnings quality. Novelty - Financial statement analysts can utilize the results of this study in interpreting earnings quality based on the characteristics of FB and NFB. Type of Paper - Empirical"

Suggested Citation

  • Golrida Karyawati Purba, 2023. "Is the Earnings Quality of Family Businesses Better Than Non-family Businesses? ," GATR Journals afr226, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:afr226
    DOI: https://doi.org/10.35609/afr.2023.8.2(1)
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    More about this item

    Keywords

    Earnings Quality; Family Business (FB); Non-family Business (NFB); Socioemotional Wealth Theory;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other

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