Intergenerational succession of family firms and annual report tone management

Using a sample of Chinese A-share listed family firms from 2007 to 2020, this study investigatesexamines how intergenerational succession influencesaffects annual report tone management from the perspective of textual disclosure. We documentfind that intergenerational succession significantly reduces tone management in family firms, primarily because successors seek to . Mechanism tests suggest that this effect is primarily driven by successors’ motivations to establish personal authority and safeguard protect family reputation following succession. Cross-sectional analyses show that tThise inhibiting effect is stronger among for successors with overseas education or training experience, limited relational capital, sole-heir status, collateral kinship ties, or multiple heirs whose when founders possess have similar levels of authority. The effectIt is also amplified when in familiesfamily firms maintain with longer control for longer periods and when firmsthose receive with greater analyst coverage. Moreover, we find that tThe reduction in tone management becomes increasingly evidentpronounced as succession advances from thesuccession preparation stage to the formal transition stage. Finally, consequenceFurther analyses reveal that the decline inreduced tone management following succession improves investor sentiment and enhances firm market value. Our findings contribute to the literature on family firm succession and accounting narrative disclosure, offering insights for facilitating effective intra-family succession.