Earnings Management and CSR Disclosure. Family vs. Non-Family Firms

Building on Institutional theory and Signaling theory, integrated with the socioemotional
wealth (SEW) approach, we studied the effect of earnings management (EM) practices on a firm’s
Corporate Social Responsibility (CSR) disclosure behavior. In so doing, we analyzed a sample of 226
non-financial, family and non-family listed firms for the period, 2006–2015. Our results suggest that
family firms, in instances of downward earnings management, are more prone to diverting attention
from these practices by means of CSR disclosure, compared to non-family firms, although the level of
family ownership exerts a moderating effect. Moreover, we found that a firm’s visibility, in terms of
size, significantly enhances this behavior and that the effect is higher for family firms.