Founding family ownership boosts earnings quality, enhancing financial transparency and trust.
The study looked at how family ownership affects the quality of a company's earnings. They found that companies owned by founding families tend to have better earnings quality. This means they have more accurate financial reports and their earnings are more informative. Family-owned companies also have less unusual expenses that can make their earnings look worse than they really are. The study shows that having a founding family involved in the company can lead to higher quality financial reporting.