The strategic choices of family firms are influenced by economic and noneconomic reference points. We contend that the preservation of the affect-related values a family derives from its ownership position in a firm (that is, socioemotional wealth [SEW]) affects financial reporting quality and earnings management strategies. Using the voluntary International Financial Reporting Standards (IFRS) adoption by Italian unlisted family firms as a natural laboratory setting, we found that the level of SEW endowment impacts on financial reporting quality. Furthermore, we observe that IFRS adoption is associated with less accrual, but higher real activity manipulation for increasing levels of SEW endowment.
Calabrò, A., Cameran, M., Campa, D., Pettinicchio, A. K., Financial reporting in family firms: a socioemotional wealth approach toward information quality, <<JOURNAL OF SMALL BUSINESS MANAGEMENT>>, 2020; (1): 1-35. [doi:10.1080/00472778.2020.1745003] [http://hdl.handle.net/10807/179855]
Financial reporting in family firms: a socioemotional wealth approach toward information quality
Pettinicchio, Angela Kate
2022
Abstract
The strategic choices of family firms are influenced by economic and noneconomic reference points. We contend that the preservation of the affect-related values a family derives from its ownership position in a firm (that is, socioemotional wealth [SEW]) affects financial reporting quality and earnings management strategies. Using the voluntary International Financial Reporting Standards (IFRS) adoption by Italian unlisted family firms as a natural laboratory setting, we found that the level of SEW endowment impacts on financial reporting quality. Furthermore, we observe that IFRS adoption is associated with less accrual, but higher real activity manipulation for increasing levels of SEW endowment.
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