Peter J. DaDalt

Does founding family control affect earnings management

Because of concentrated ownership stakes, board composition and longer-investment horizons, founding-family controlled firms provide an interesting setting for examining issues relating to governance and control. Anderson and Reeb (2003a, b, 2004), find that the founding-family controlled structure results in superior stock market and accounting performance and lower cost of debt compared to their nonfamily controlled counterparts. We add to their findings by examining the relationships between founding family control and earnings management. The unique characteristics of family controlled firms could insulate these firms from pressures to manage earnings. Our results support this notion, and find that family firms are significantly less likely to manage earnings.

Does Founding Family Control Affect Earnings Management? An Empirical Note

Because of concentrated ownership stakes, board composition, and longer investment horizons, founding-family controlled firms provide an interesting setting for examining issues relating to governance and control. Anderson and Reeb (2003a, 2003b, 2004), find that the founding-family controlled structure results in superior stock market and accounting performance and lower cost of debt compared to their non-family controlled counterparts. We add to their findings by examining the relationships between founding family control and earnings management. The unique characteristics of family controlled firms could insulate these firms from pressures to manage earnings. Our results support this notion, and find that family firms are significantly less likely to manage earnings.

Do derivatives affect the use of external financing

We examine whether derivatives use reduces the utilization of external financing for a large sample of nonfinancial firms over the period 2002 to 2004. Using the measures of net external finance as discussed in Bradshaw et al. (2006), we find a negative association between corporate derivative use and the use of external financing. Further, we find the relationship is driven by differences in the use of debt, as opposed to equity financing.