Earnings Management around Founder CEO Re-appointments and Successions in Family Firms

Earnings Management around Founder CEO Re-appointments and Successions in Family Firms

Marc Goergen, Svetlana Mira, Iram Fatima Ansari

Series number :

Serial Number: 
620/2019

Date posted :

August 27 2019

Last revised :

August 27 2019
SSRN Share

Keywords

  • Earnings management • 
  • family firms • 
  • Founders • 
  • socio-emotional wealth • 
  • CEO turnover • 
  • CEO successions.

This paper studies CEO re-appointment and succession events in listed family firms with an incumbent family CEO in France, Germany and the UK over 2001-2016. The paper explores whether family firms with a founder CEO are more likely to engage in earnings management pre-event than other family firms and non-family firms.

Compared to non-family firms, family firms practice less upward earnings management. Nevertheless, we find evidence of pre-event upward earnings management for firms that re-appoint their founder CEO, but no such earnings management for other family firms. Finally, we also show that the new CEOs in non-family firms engage in upward earnings management after their appointment.

Authors

Real name: 
Iram Fatima Ansari
Real name: 
Svetlana Mira