Family-controlled Chinese listed corporations and earnings management

![CDATA[This study analyzes ownership and control of A-share family corporations listed on the Shanghai Stock Exchange. The study provides two competing theories of the effect of family control on earnings management: the entrenchment effect and the alignment effect. Under the first, the earnings credibility of the company is weakened because non-controlling interests are expropriated by controlling family owners. Under the second, a highly concentrated ownership gives a controlling family owner strong voting and cash flow rights. If the controlling owner extracts high levels of private benefits, the share price will be discounted. The empirical results are consistent with two explanations.]]