Do Family Firms Provide More or Less Voluntary Disclosure?

Abstract

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.

Board Mechanisms and Malaysian Family Companies’ Performance

“…this indicates that the accounting indicators (EPS and OCF) are more sensitive, directly related to financial survivability and reflect the evaluation of performance (Sun & Tong 2003) as compared to the market indicator (tobin's Q). the findings are consistent with previous studies (Chen et al 2008;Chen & Nowland 2010). With large boards, family firms have more resources, wider external relationship, higher problem solving capabilities and diversity in the .045** .431*** .085*** 1 ** significant at 0.05 (2 tailed), ***significant at 0.01 (2 tailed).…”

“…Larger boards mean that there are more ideas and skills that can be shared among board members. However, studies have found that family companies have slightly smaller boards and lower board independence than non-family firms (Chen, Chen & Cheng 2008). The smaller board size may be due to a trade-off between growth and risk exposure faced by the firms.…”

The association between corporate governance and corporate disclosure: A critical review

“…Chen et al (2008) find that family owners on average prefer less voluntary disclosure. Donnelly and Mulcahey (2008) examine the association between corporate governance and corporate disclosure by using a disclosure index based on Eng and Mark (2003); the results show that there is a positive relationship between non executive directors and the greater the level corporate voluntary disclosure.…”

Family Firms as a Potential Source of Growth for the Warsaw Stock Exchange

“…35% of the Standard and Poor (S&P) 500 Industrials as well as 46% of S&P 1500 were family owned businesses [Anderson and Reeb, 2003;Chen et al, 2007]. In Germany, almost a half of all listed companies were family owned, excluding companies from financial sector [Achleitner et al, 2009], while in Spain it was almost 40% [Zulfiqar i Fayyaz 2014].…”