The authors study the effects of altruism and intention for succession on family firm's reputation risk-taking behaviors in Chinese publicly listed companies.
The authors use earnings management as a proxy for reputation risk in family firms, and hand-collected relationship between family members to measure the closeness of incumbent family members and their potential successors as a proxy for the altruistic degree.
Results show that, in developing countries like China, familial altruism in family firms with succession plans, which does not reduce the practice of earnings management, should be considered by practitioners while detecting it.
The hand collected data are very unique; the authors have focused on the relationship between incumbents and successors and the authors define their closeness by using genes shared between them.
