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Ownership Structure and Accounting Information Content: Evidence from France
Author(s) -
Zhao Ronald,
MilletReyes Benedicte
Publication year - 2007
Publication title -
journal of international financial management and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.818
H-Index - 37
eISSN - 1467-646X
pISSN - 0954-1314
DOI - 10.1111/j.1467-646x.2007.01013.x
Subject(s) - accounting , accrual , business , corporate governance , earnings , creditor , transparency (behavior) , fair value , incentive , accounting information system , debt , financial system , monetary economics , finance , economics , market economy , political science , law
This paper investigates how family and bank ownership affect the accounting information content of French firms. In Continental Europe, the existence of block‐holders triggers specific corporate governance issues, including the transparency of financial reporting. Our test results for the clean surplus model show that book value carries a significantly greater weight for family‐controlled firms. This finding is attributed to their lack of incentive to report timely and relevant earnings to outside (minority) investors. In contrast, bank owners are under more market pressure to achieve earnings persistence through the use of accounting accruals. Bank ownership is also associated with higher levels of debt. These results are consistent with findings that in code law countries, insiders dominate as a source of finance, and financial reporting is aimed at creditor protection.