Excerpt of an interview of Professor Ghosh that was featured on Taking Account, a Stan Ross Department of Accountancy Newsletter (Fall 2015)

 

 

Question: What inspired you to research this topic of family firms?

Professor Ghosh: In a series of business trips to Italy, I found that families play a dominant role in running companies there. Family-owned or family-run companies are generally managed successfully. Investors prefer to invest in family firms because they are stable companies with their own unique ways of managing capital and growing investments and profits. Because much of the academic research on family firms is concentrated in finance, my objective was to improve our understanding of family firms’ accounting practices by examining how auditors, who are professionally trained to evaluate accounting or financial reporting practices, view family firms’ reporting quality.

Question: What do you hope that readers of your paper on family firms (published in Journal of Accounting and Economics 2015) learn from it?

Professor Ghosh: One fundamental reason why investors value family firms more than non-family firms is lower information risk when investing in family firms, which comes due to their superior financial reporting quality relative to non-family firms.

Question: How do you think the results of your research will be applied in the field?

Professor Ghosh: Our results suggest that family firms are risk averse and therefore more cautious in their approach to risk taking. Our study underscores why in less-developed capital markets, or in emerging markets, family operating businesses are such a dominant business force.

November 6, 2015, 4.07P

 

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