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<p>This study examines the financial management arrangements of family firms during succession, using a sample of 1393 firm-year observations from 2002 to 2019 in China where the successors are descendants of the business owners. We find strong evidence that family firms with a female successor are more likely to engage in downward real earnings management in the year of succession compared to those with a male successor. The aim is to create room for increasing future annual profits. Our analysis suggests that societal perceptions of women's roles may influence their motivation to gain recognition during the succession process. Further analysis indicates that the downward earnings management by female successors is particularly pronounced when the successor possesses average capabilities or faces a challenging succession process. However, while the intention behind earnings management might be to stabilize or enhance the financial appearance during the succession period, it might not be beneficial for the long-term performance of family firms.</p>

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Financial arrangement of female successors: a perspective from earnings management during successions in Chinese family firms

  • 期刊论文

  • 发表日期：

    2025年2月3日

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  • Ruoyu Weng,
  • Shihui Chen,
  • Qiuping Chen

摘要

This study examines the financial management arrangements of family firms during succession, using a sample of 1393 firm-year observations from 2002 to 2019 in China where the successors are descendants of the business owners. We find strong evidence that family firms with a female successor are more likely to engage in downward real earnings management in the year of succession compared to those with a male successor. The aim is to create room for increasing future annual profits. Our analysis suggests that societal perceptions of women's roles may influence their motivation to gain recognition during the succession process. Further analysis indicates that the downward earnings management by female successors is particularly pronounced when the successor possesses average capabilities or faces a challenging succession process. However, while the intention behind earnings management might be to stabilize or enhance the financial appearance during the succession period, it might not be beneficial for the long-term performance of family firms.