Abstract
In this review paper, we bring together a number of aspects of family
firms that are ubiquitous in a number of institutional contexts,
often as part of larger business groups. We pay particular attention
to the mechanisms by which families retain control over firms, and
the incentives of the families in control to expropriate other stakeholders
by way of tunnelling. We examine the role of earnings management
in facilitating tunnelling, and evidence about the incidence of earnings
management in family firms. Our review suggests that while the literature
on these aspects of family control is rich, the contexts in which
the empirical exercises are undertaken are relatively few, and hence
there is considerable opportunity to expand it to other contexts,
in particular in the form of cross-country comparisons of the relative
impact of agency conflicts and institutions on these issues.
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