Real Earning Management in Family Firm: A Case Study of Pakistan Context

Abstract

The study investigates the real earning management and its relationship with family firms in the Pakistani context. Family business and non-family business must have different impacts on the earnings of a firm. To investigate abnormal cash flows, abnormal Discretionary expenses and abnormal production cost is selected as dependent variables while Size of the firm, return on assets, growth, leverage ratio and firm age were selected as independent variables. For analysis descriptive statistics, correlation Metrix and regression were used for the data of 30 Pakistani firms selected from the Pakistan stock exchange. The time duration for the study was from 2015 to 2020. The study concludes that family firms are strongly associated with non-family firms and earning management is essential for both types of firms for future survival.