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The effect of socioemotional wealth diversity within the top management team on earnings management in private family firms: The moderating role of the board of directors
Author(s) -
Corten Maarten,
Vandekerkhof Pieter,
Steijvers Tensie
Publication year - 2021
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3352
Subject(s) - socioemotional selectivity theory , earnings management , business , diversity (politics) , accounting , respondent , harm , quality (philosophy) , earnings , psychology , social psychology , developmental psychology , philosophy , epistemology , political science , law , sociology , anthropology
Using a unique multiple‐respondent dataset of 218 individual managers of 37 private family firms, this study examines differences in the importance attached to socioemotional wealth (SEW) preservation among top management team (TMT) members as a determinant of earnings management. Such SEW diversity might cause conflicts that can harm TMT decision‐making quality and, ultimately, firm performance, which the TMT might cover up by engaging in earnings management. Furthermore, we examine to what extent a board of directors that functions as a sounding board is able to mitigate the relationship between SEW diversity within the TMT and earnings management.