Family control, board independence and earnings management: Evidence based on Hong Kong firms |
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| Authors: | Bikki Jaggi Sidney Leung Ferdinand Gul |
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| Affiliation: | aDepartment of Accounting and Information Systems, School of Business, Rutgers University, Levin Building, Piscataway, NJ 08854, United States;bThe Hong Kong Polytechnic University, Hong Kong;cDepartment of Accountancy, City University of Hong Kong, Hong Kong;dSchool of Accounting and Finance, The Hong Kong Polytechnic University, Hong Kong;eThe Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia |
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| Abstract: | In this study, we document that independent corporate boards of Hong Kong firms provide effective monitoring of earnings management, which suggests that despite differences in institutional environments, corporate board independence is important to ensure high-quality financial reporting. The findings also show that the monitoring effectiveness of corporate boards is moderated in family-controlled firms, either through ownership concentration or the presence of family members on corporate boards. The results based on firms reporting small earnings increases provide additional support for our finding that the monitoring effectiveness of independent corporate boards is moderated in family-controlled firms. |
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| Keywords: | Corporate governance Earnings management Earnings quality Family ownership concentration Family board members |
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