Title: The relationship between the socio-emotional wealth dimensions and earnings management by thresholds: evidence from French family companies

Authors: Zeineb Feki-Cherif; Saoussen Boujelben; Salma Damak-Ayadi

Addresses: LIGUE, ISCAE Manouba, Manouba University, Tunisia ' URAMEF, Sfax Business School, ESCS, Sfax University, Tunisia ' IHEC Carthage, Carthage University, Tunisia; LIGUE, Manouba University, Tunisia

Abstract: The objective of this study is to investigate the relationship between a two socio-emotional wealth dimensions, (i.e., family control and influence and the transgenerational sustainability), and the family managers' willingness to manipulate earnings level to meet or beat zero threshold. Based on an initial sample including all listed firms on CAC All-Tradable during 2014 to 2016, we extracted a final sub-sample composed of 124 observations of suspected family-firms. We developed two proxies for family control and influence dimension, i.e., the proportion of family board directors and the appointment of a family CEO. We proxied the family interest to preserve the transgenerational sustainability by the firm belonging to the founding generation. We found positive relationship between the proportion of family board directors, the generation to which a family firm belongs and earnings management to avoid loss reporting using real activities. The relationship strengthens after the fiscal year end as all variables measuring the family attachment to the SEW dimensions are significant determinant of discretionary accruals to reach zero threshold.

Keywords: socio-emotional wealth; family control and influence; transgenerational sustainability; earnings management; zero threshold.

DOI: 10.1504/IJCG.2021.117212

International Journal of Corporate Governance, 2021 Vol.12 No.1, pp.79 - 104

Received: 14 Sep 2020
Accepted: 10 Apr 2021

Published online: 13 Aug 2021 *

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