Abstract
This research aims to analyze the relationship between the characteristics of the Board of Directors (BoD) and the effectiveness of the monitoring of earnings manipulation activities in family – controlled companies in Italy. In particular, specific hypotheses relating to the link between those aspects of the Board, that substantiate its independence, and earnings quality have been formulated to verify whether the mechanisms for monitoring management activity are less effective in these companies.
 
 This study applies a univariate and multivariate methods on a sample of Italian listed company over the period 2014-2016.  Earnings management is defined by the proxy of abnormal working capital accrual (AWCA) estimed model according to DeFond and Park (2001). Proxies for corporate governance mechanism are the board size, the level of board independence, the CEO non-duality and the interaction between the last two variables.
 
 The research shows that independent directors are not, as in other contexts, a factor that contributes to earnings quality, in the same way that the separation of the offices of Chairman of the Board of Directors and Chief executive Officer (CEO) does not appear to be relevant to this end.
 
 The study aims to provide a double contribution. First, the research represents one of the few studies concerning the Italian context with its peculiarities, taking into consideration the earnings management issue in companies with a high concentration of family ownership.
 
 Secondly, this study aims to further stimulate the debate on the most effective features of structure and composition of the BoD in family-controlled companies: specifically, the conclusions could lead to a reconsideration of the validity of certain characters of the boards that defines independence.
Highlights
The relationship between financial information and corporate governance structures is a topic of great current interest and relevance
We developed one model to examine the relationship between earnings management and CDA SIZE, Independent directors” (IND), non duality (NO DUAL) and IND * NO DUAL
The correlation analysis, shows that, in both samples, abnormal working capital accrual (AWCA) is negatively related to IND, in accordance with expectations
Summary
The relationship between financial information and corporate governance structures is a topic of great current interest and relevance. The research carried out has investigated the quality and effectiveness of those corporate governance measures that make it possible to identify and limit earnings management activities and which refer mainly to public companies and the Anglo-Saxon capitalist context with its peculiarities in terms of highly developed financial markets, widely distributed ownership structure and a high degree of control contestability This relationship between the two phenomena, on the other hand, has not been sufficiently studied with reference to companies with a high concentration of family ownership, as it is complex to evaluate the ways in which the combination of related agency problems can influence their accounting behavior and financial information practices. Family members enjoy the advantages deriving from the natural alignment between the interests of the management and those of the shareholders, who share the common goal of creating value in ijbm.ccsenet.org
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