Do Family Firms Provide More or Less Voluntary Disclosure

By Shuping Chen, Xia Chen, Qiang Cheng. 2008

568 citations recorded by the source corpus.

We examine the voluntary disclosure practices of family firms. We find that, compared to nonfamily firms, family firms provide fewer earnings forecasts and conference calls, but more earnings warnings. Whereas the former is consistent with family owners having a longer investment horizon, better monitoring of management, and lower information asymmetry between owners and managers, the higher likelihood of earnings warnings is consistent with family owners having greater litigation and reputation cost concerns. We also document that family ownership dominates nonfamily insider ownership and concentrated institutional ownership in explaining the likelihood of voluntary disclosure. Using alternative proxies for the founding family's presence in the firm leads to similar results.

Subfields: Accounting, Organizational Behavior and Human Resource Management

View Paper: https://www.semanticscholar.org/paper/2edd4eece7cbcc775f7132f77b95c54fa0720155

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In Accounting

In Organizational Behavior and Human Resource Management

Citations in the corpus

Image and reputation of family firms: a systematic literature review of the state of research (2018, background): “From the investor perspective, voluntary disclosure policy (Chen et al. 2008), tax aggressiveness (Chen et al.”
Are Family Firms More Tax Aggressive Than Non-Family Firms? (2010, background): “Consistent with family owners‟ greater reputation and litigation concerns, Chen, Chen, and Cheng (2008) find that although family firms on average provide less voluntary disclosure than non-family firms, they are more likely to give earnings warnings to preempt the negative publicity that can…”
Assessing Financial Reporting Quality of Family Firms: The Auditors’ Perspective (2015, unknown): “Our study extends previous research (Wang, 2006; Ali et al., 2007; Chen et al., 2008; Jaggi et al., 2009) by offering a complementary perspective, that is, how auditors' assess family firms' financial reporting quality.”
Tax avoidance, corporate governance, and corporate social responsibility: The case of the Egyptian capital market (2020, background): “…toward shareholder wealth (Godfrey, 2005). r e Family members have more concern about reputation and litigation costs than non-family directors (Chen et al., 2008; Wang, 2006). l In this context, the idea of socio-emotional wealth was in prior studies to explain the response of family firms to…”
Compliance with IFRS 3- and IAS 36-required disclosures across 17 European countries: company- and country-level determinants (2013, background): “To alleviate these problems, companies with widely dispersed ownership may disclose more information (Hossain et al. 1994, Chau and Gray 2002, Abdelsalam et al. 2007, Chen et al. 2008).”
The Influence of Family Ownership on the Quality of Accounting Information (2010, background): “In addition, the relationship-based approach between managers and owners can profoundly reduce the risk of rent extraction by the top management team: The lengthy tenures and lower tendency to use incentive mechanisms reduce the extent to which family firms manipulate accounting information (Chen et”
Employee Ownership and Firm Disclosure (2015, methodology): “based on Chen et al. (2008) and reflect whether investors consider the information in the press”
Management Earnings Forecasts and Other Forward-Looking Statements (2017, unknown): “Chen et al. (2008) use earnings forecasts to look at the voluntary disclosure practices of family firms.”
The impact of multi-layer governance on bank risk disclosure in emerging markets: the case of Middle East and North Africa (2019, background): “…ownership ( GOWN ), family ownership ( FOWN ), and the RDI is in line with the ﬁ ndings of prior studies (Alhazaimeh et al., 2014; Ali et al., 2007; Cascino et al., 2010; Chen et al., 2008; Eng & Mak, 2003; Ghazali, 2007; Ntim et al., 2013; Ntim & Oseit, 2011; Wan-Hussin, 2009; Wang, 2006).”