Market Reaction to Restatement and Distortion of Financial Information in Family-owned Companies

The main purpose of this research is to investigate the market's reaction to the re-presentation and distortion of financial information in family-owned companies. To achieve the goal of the research, the statistical population includes all the companies admitted to the Tehran Stock Exchange and the statistical sample includes 110 companies from 2007 to 2021. To test the research hypotheses, multivariate regression statistical analysis has been used. Using a matched firm’s approach, the research results showed that family ownership reduces the occurrence of financial information distortion, consistent with the notion that controlling families are more concerned about reputation than non-family block holders. Nevertheless, the results showed that compared to the renewals in non-family companies, the renewals announced by family-controlled companies create more negative reactions in the market. The more negative market reactions can be attributed to a greater loss of reputation and greater investor skepticism about the credibility of family firm insiders than nonfamily firms after the restatement