The Managerial Ability Of Family Firms And Earnings Quality

Family firms in China’s capital market have an important status, which managers heterogeneity made management ability resulted in different influence on earnings quality. By using data of A shares from listed family firms on the stock market of Shanghai and Shenzhen during 2011 to 2014 as example, we empirically examine the effects of the managerial ability of family firms impact on earnings quality. Heterogeneity of the management makes the managerial ability different, and higher ability of management to the enterprise earnings quality has certain role in promoting.There are five chapters in this paper. Chapter 1 is introduction. Chapter 2 is a literature review on factors affecting of the earnings quality, family firms and earnings quality, managerial ability and earnings quality related literature at home and abroad. Chapter 3 introduces theoretical basis and research hypothesis. The hypothesis is underpinned by the definition of family enterprises, managerial ability and earnings quality, the relative theories of principal-agent, upper echelons of management theory and human capital theory. Chapter 4 is the research design and empirical analysis, which introduces the sample selection and data sources, variable definition, model construction and empirical test. Finally, it concludes the dissertation by stating its research conclusions, and putting forward policy recommendations, limitations and future prospects.The major conclusions of the dissertation are as follows:1.Compared with non-family firms, family firms have higher earnings quality. Due to the particularity of the family firms, the first class of agency costs is relative small, and earnings quality of family firms are mainly affects by top management directly. Compared with non-family firms, the effect of the first kind of agency cost of family firms on earnings quality is more significant. The family firm owners can achieve effective supervision over managers to, earnings are motivated by managers of maneuvering doctrine and manipulated the possibility is small.2.The higher managerial ability of family firms, the higher earnings quality. The higher managerial ability of family firms, the more effective use of various resources of firms, the more forward-looking reliable information and inclined to release the real earnings information.3.The managerial ability of family members has more significant positive effect on the earnings quality compare with the occupation managers. The unique human capital advantage of family firms makes family members earlier "socialization". Family members are the heirs of the family wealth, so the possibility of manipulating the surplus is very small.4.Compared with the non-entrepreneurial family firms, the managerial ability of entrepreneurial family firms has more significant positive influence on the earnings quality. Managers of entrepreneurial family firms are the founder of core business and sever as executive positions, and compared with the managers of entrepreneurial family firms, who is less likely to manipulation of earnings.