Mandatory restatements are unique in the nature whereas they are often ignored in restatement literature examining restating firms¡¦ replacement decisions. Furthermore, family studies little examine the role family involvement plays in determining financial reporting quality and firms¡¦ replacement decisions. This paper is motivated to investigate the impact of mandatory restatements and the restatement severity to related parties of financial statements. Particularly, this paper also concerns on the moderating effect of family involvement (family shareholding and family directorships) in the above association. The findings indicate that mandatory restating firms would replace top management, financial executives, firm auditors and supervisors. Firms with higher mandatory restatement severity have more frequent turnover of firm auditors, supervisors and internal auditors. Besides, the findings show that family involvement is an essential moderating factor in the relationship between mandatory restatement and firms¡¦ replacement decisions. The evidence shows that family shareholding has limited motivating effects for family members to be in favor of the replacement of related parties of financial statements involving in material financial reporting failure. However, family directorships enhance family members¡¦ entrenchment in influencing the firms¡¦ replacement decisions so as to strengthen family control. Some evidence indicates that mandatory restating firms would still replace family CEO with family CEO, which further supports the possibility that family members limit managerial positions to capture control of the firms. Overall, the evidence provides a warning sign to Taiwanese security regulators that there¡¦s a necessary to emphasize the punishment mechanisms for those who are responsible for accounting scandals, strengthen managerial turnover disclosure about their family status and educate individual investors the value of turnover disclosure.