The moderating role of internationalization in the relationship between family ownership and earnings quality: Empirical evidence from Thailand

This study investigates how internationalization influences the relationship between family ownership and earnings quality. The analysis is based on 537 firm-year observations from 179 companies listed in Thailand, covering the Agricultural and Food, Consumer Products, Industrials, and Technology sectors during 2017–2019. The study employs firm-fixed-effects panel regression models with cluster-robust standard errors. Earnings quality is measured by the absolute value of discretionary accruals, while internationalization is captured by the foreign-sales-to-total-sales ratio (FSTS). The main findings indicate that family ownership alone does not have a significant impact on earnings quality. However, a higher level of foreign sales is weakly associated with increased abnormal accruals. Importantly, the results show that when foreign sales exceed about 25% of total revenue, family ownership is linked to lower discretionary accruals, suggesting improved earnings quality. Additionally, the advantages of strong governance practices appear to grow as foreign sales increase. This research adds to the literature on corporate governance and international business by showing that the influence of family ownership on financial reporting depends on the firm's international exposure. In practice, investors may perceive internationally active family firms as having lower reporting risk, while regulators may need to focus more on domestic family-owned firms.