Work

Family control, socioemotional wealth and financial reporting under adversity

Year: 2026

Type: article

Abstract: Disclosure of financial data is subject to substantial managerial discretion and for this reason it may be subject to opportunistic reporting. Income smoothing in particular is not illegal, yet it may be used in a manipulative fashion to level fluctuations in net income across reporting periods and thus project a more consistent earnings flow over time under crisis or bad financial conditions. Using a large data set of 4634 firm year observations during a period that included the “Great Recession” of 2008, we support the hypothesis that family firms are less likely to engage in income smoothing when the firm is experiencing external shocks and financial pressures. Furthermore, this more transparent family reporting practice is positively associated with future financial performance.

Source: Journal of Family Business Strategy

DOI: 10.1016/j.jfbs.2026.100736

Authors: Luis R. Gomez-Mejia, Cristina Cruz Serrano, Claudia Imperatore

Institutions: Arizona State University, Bocconi University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $3,730

OpenAlex ID: W7165801465

FWCI:

Cites: 110

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