The role of board independence in mitigating agency problem II in Australian family firms

Lauw Setia-Atmaja, Janto Haman, George Tanewski

Research output: Contribution to journalArticleResearchpeer-review

22 Citations (Scopus)

Abstract

We investigate the impact of board independence on earnings management on a sample of family controlled firms listed on the Australian Securities Exchange (ASX). Using panel data over the period 2000-2004, we find evidence of earnings management among family controlled firms in Australia, an environment of high investor protection and private benefits of control. Findings show that a higher proportion of independent directors on boards is effective in reducing earnings management, thereby mitigating agency problems associated with entrenchment and expropriation in family firms. We also find that managers of family firms are less aggressive in managing earnings via discretionary long-term accruals compared to non-family firms.
Original languageEnglish
Pages (from-to)230 - 246
Number of pages17
JournalBritish Accounting Review
Volume43
Issue number3
DOIs
Publication statusPublished - 2011

Cite this

Setia-Atmaja, Lauw ; Haman, Janto ; Tanewski, George. / The role of board independence in mitigating agency problem II in Australian family firms. In: British Accounting Review. 2011 ; Vol. 43, No. 3. pp. 230 - 246.
@article{f6889b9be8534acaa067f11aa07a0790,
title = "The role of board independence in mitigating agency problem II in Australian family firms",
abstract = "We investigate the impact of board independence on earnings management on a sample of family controlled firms listed on the Australian Securities Exchange (ASX). Using panel data over the period 2000-2004, we find evidence of earnings management among family controlled firms in Australia, an environment of high investor protection and private benefits of control. Findings show that a higher proportion of independent directors on boards is effective in reducing earnings management, thereby mitigating agency problems associated with entrenchment and expropriation in family firms. We also find that managers of family firms are less aggressive in managing earnings via discretionary long-term accruals compared to non-family firms.",
author = "Lauw Setia-Atmaja and Janto Haman and George Tanewski",
year = "2011",
doi = "10.1016/j.bar.2011.06.006",
language = "English",
volume = "43",
pages = "230 -- 246",
journal = "British Accounting Review",
issn = "0890-8389",
publisher = "Elsevier",
number = "3",

}

The role of board independence in mitigating agency problem II in Australian family firms. / Setia-Atmaja, Lauw; Haman, Janto; Tanewski, George.

In: British Accounting Review, Vol. 43, No. 3, 2011, p. 230 - 246.

Research output: Contribution to journalArticleResearchpeer-review

TY - JOUR

T1 - The role of board independence in mitigating agency problem II in Australian family firms

AU - Setia-Atmaja, Lauw

AU - Haman, Janto

AU - Tanewski, George

PY - 2011

Y1 - 2011

N2 - We investigate the impact of board independence on earnings management on a sample of family controlled firms listed on the Australian Securities Exchange (ASX). Using panel data over the period 2000-2004, we find evidence of earnings management among family controlled firms in Australia, an environment of high investor protection and private benefits of control. Findings show that a higher proportion of independent directors on boards is effective in reducing earnings management, thereby mitigating agency problems associated with entrenchment and expropriation in family firms. We also find that managers of family firms are less aggressive in managing earnings via discretionary long-term accruals compared to non-family firms.

AB - We investigate the impact of board independence on earnings management on a sample of family controlled firms listed on the Australian Securities Exchange (ASX). Using panel data over the period 2000-2004, we find evidence of earnings management among family controlled firms in Australia, an environment of high investor protection and private benefits of control. Findings show that a higher proportion of independent directors on boards is effective in reducing earnings management, thereby mitigating agency problems associated with entrenchment and expropriation in family firms. We also find that managers of family firms are less aggressive in managing earnings via discretionary long-term accruals compared to non-family firms.

U2 - 10.1016/j.bar.2011.06.006

DO - 10.1016/j.bar.2011.06.006

M3 - Article

VL - 43

SP - 230

EP - 246

JO - British Accounting Review

JF - British Accounting Review

SN - 0890-8389

IS - 3

ER -