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Do Family Firms Provide More or Less Voluntary Disclosure?
Shuping Chen, University of Washington Business School
Xia Chen, University of British Columbia
Qiang Cheng, University of British Columbia
ABSTRACT. We examine the voluntary disclosure practices of family firms. We find that, compared to non-family firms, family firms tend to provide less voluntary disclosure of both good and bad forward-looking information. This is consistent with family owners having a longer investment horizon, better monitoring of management, and less information asymmetry between owners and managers in family firms. We also document that the potential entrenchment of the founding family, as proxied by extremely high family ownership or a dual class share structure, leads to even less voluntary disclosure. Furthermore, family ownership dominates non-family insider ownership and concentrated institutional ownership in explaining the likelihood of voluntary disclosure. We perform a battery of sensitivity analyses and obtain robust results. Overall, these results indicate that family owners’ preferences for voluntary disclosure of timely information are different from those of institutional investors, non-fam
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