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Small Business Economics

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10-10-2022

Ownership succession intentions affecting earnings management in private family firms

Authors: Ine Umans, Maarten Corten

Published in: Small Business Economics | Issue 2/2023

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Abstract

Drawing on agency and socioemotional wealth theory, this study elucidates that ownership succession intentions affect earnings management in private family firms. Based on a combination of questionnaire data and archival data of 331 Belgian private family firms, results indicate that family firms intending to transfer ownership to non-family members engage more in earnings management than those planning to transfer ownership to family members. Our findings also show differences in earnings management within each subset of ownership succession, thereby highlighting family firm heterogeneity. Family owners intending to transfer ownership to their children engage less in upward earnings management than those planning to transfer ownership to other family members. Family owners intending to transfer ownership to employees engage more in downward earnings management than those intending to transfer ownership to outsiders. This study contributes to both theory and practice by considering ownership succession intentions as a driver of earnings management.

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Title: Ownership succession intentions affecting earnings management in private family firms
Authors: Ine Umans
Maarten Corten
Publication date: 10-10-2022
Publisher: Springer US
Published in: Small Business Economics / Issue 2/2023
Print ISSN: 0921-898X
Electronic ISSN: 1573-0913
DOI: https://doi.org/10.1007/s11187-022-00696-5

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