Effects of family ownership on financial and non-financial reporting quality
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This study examines whether financial, non-financial, and corporate reporting quality differ between family-owned firms and non-family firms. Furthermore, the role of family managers and ownership concentration is studied. Family-owned firms are argued to have higher reporting qualities due to pressures from minority shareholders to prevent expropriation, and due to Socio-Emotional Wealth factors; reputation, long-term vision, and strong dependence on firm performance for personal wealth should all contribute to higher financial, non-financial, and corporate reporting quality. Using a unique panel data set consisting of 3461 publicly traded firms from 68 different countries from 2010 to 2021, the results show that family-owned firms provide significantly higher-quality financial reporting quality. However, non-financial reporting quality is significantly lower in family-owned firms. This effect is stronger in family-owned firms with family managers, suggesting family managers are better aligned with the families’ goals. Finally, this study provides evidence that ownership concentration strengthens the aforementioned relationships, and that previously used cut-offs for family-owned firms might not grasp the concept of family ownership perfectly.
Faculteit der Managementwetenschappen