Financial reporting and the protection of socioemotional wealth in family-controlled firms

Luis Gomez-Mejia, Cristina Cruz, Claudia Imperatore

Research output: Contribution to journalArticle

46 Scopus citations

Abstract

We develop an integrated framework to financial reporting decisions in family-controlling firms. Our model contends that in these firms, financial reporting decisions (i.e. earnings management and voluntary disclosure) are driven by a diverse set of family owners’ motives that can be synthesised in the preservation of the different aspects of the family socioemotional wealth (SEW). The proposed model suggests the criticality of recognising the existence of different family owners’ reference points, given the gambling nature of accounting choices. By focusing on two dimensions of SEW (‘Family Control and Influence’ and ‘Family Identification’), we explore how the prioritisation of one dimension or the other will imply a different family owners’ evaluation of benefits and costs of accounting strategies and, hence, a diverse resolution of the accounting gamble.

Original languageEnglish (US)
Pages (from-to)387-402
Number of pages16
JournalEuropean Accounting Review
Volume23
Issue number3
DOIs
StatePublished - Sep 4 2014
Externally publishedYes

ASJC Scopus subject areas

  • Accounting

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