Exploring the impact of corporate social responsibility on real earning management and discretionary accruals

Corporate social responsibility (CSR) and earning management have become important to firm’s operation. Previous researches use of discretionary accruals (DA) as a proxy variable for earnings management can easily result in errors in empirical analysis. Thus, this study uses the CSR index proposed b...

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Bibliographic Details
Published inCorporate social-responsibility and environmental management Vol. 28; no. 1; pp. 333 - 351
Main Authors Chen, Roger C.Y., Hung, Shih‐Wei
Format Journal Article
LanguageEnglish
Published Chichester, UK John Wiley & Sons, Inc 01.01.2021
Wiley Periodicals Inc
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Summary:Corporate social responsibility (CSR) and earning management have become important to firm’s operation. Previous researches use of discretionary accruals (DA) as a proxy variable for earnings management can easily result in errors in empirical analysis. Thus, this study uses the CSR index proposed by Chen et al. 2013. Journal of American Business Review, 2, 181–188, discretional accrual and real earning management to examine the association with CSR, earning management, and firm value. The empirical results find that the firm engages CSR not only to increase more information transparency of CSR and creating interaction with stakeholders but also to reduce earning management phenomenon. When firm has lower CSR performance, it has prone to earning management. In addition, CSR performance can enhance firm value, but the firm engage CSR to cover up and shift attention away from earnings manipulation by managers, it would decrease firm value.
Bibliography:Funding information
This study was funded by Ministry of Science and Technology (Taiwan) (MOST102‐2410‐H‐327‐002‐MY2).
ISSN:1535-3958
1535-3966
DOI:10.1002/csr.2052