Research On Earnings Quality Of Family Firms

This paper focuses on the earnings quality disclosed in the financial statements of Chinese listed company. Since the reform and open-up, family firms have been developing fast. Because of lack of capital, some of them choose to finance by issuing stock. Study abroad, family firms are different from the earnings quality of non-family firms. There is relatively focused on this kind of research, it is necessary to have in-depth study on this topic.This paper analyzes the difference between family firms and non-family firms from the perspective of agent theory. Then this article focuses on studying of family business. Finally according to problems of corporate governance, this paper proposes useful advice.Compared to non-family firms, family firms face less severe agency problems that arise from the separation of ownership and management (Type Ⅰ agency problems). Meanwhile, they are characterized by more severe agency problems between controlling and non-controlling shareholders (Type Ⅱ agency problems). The characteristics of family firms on agency problems impact its earnings quality. This article found that family firms have better earnings quality disclosed in its own statements.The rest of the paper is organized as follows. First this paper define the definition of family firms. Then the article deeply research on discretionary accruals and earnings persistence. At last, I conclude the paper and propose useful advice according to problems of corporate governance.