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Moderating Effect of Earnings Management on the Relationship Between Corporate Social Responsibility Disclosure and Profitability of Banks in Indonesia

Author

Listed:
  • Jaja Suteja

    (Faculty of Economics, Universitas Pasundan, Jalan Tamansari 6-8 Bandung, 40116, Indonesia,)

  • Ardi Gunardi

    (Faculty of Economics, Universitas Pasundan, Jalan Tamansari 6-8 Bandung, 40116, Indonesia)

  • Annisa Mirawati

    (Faculty of Economics, Universitas Pasundan, Jalan Tamansari 6-8 Bandung, 40116, Indonesia.)

Abstract

This study aims to obtain empirical evidence of earnings management (EM) as a moderating variable between corporate social responsibility (CSR) and profitability. This research was conducted by taking a sample of banking companies listed in the Indonesia Stock Exchange in 2010-2014. Data were collected using purposive sampling. The statistical method used was moderated regression analysis. Findings proved that CSR disclosure positively and significantly influences a company's profitability. By contrast, eaarnings management had a negative and significant influence as the moderating variable on the relationship between CSR and a company's profitability. These results suggested that a high level of EM, which leads to an enhanced CSR program, corresponds to weak profitability of the banking companies

Suggested Citation

  • Jaja Suteja & Ardi Gunardi & Annisa Mirawati, 2016. "Moderating Effect of Earnings Management on the Relationship Between Corporate Social Responsibility Disclosure and Profitability of Banks in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 6(4), pages 1360-1365.
  • Handle: RePEc:eco:journ1:2016-04-09
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    References listed on IDEAS

    as
    1. Sylvia Veronica Siregar & Yanivi Bachtiar, 2010. "Corporate social reporting: empirical evidence from Indonesia Stock Exchange," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, vol. 3(3), pages 241-252, August.
    2. Leonardo Becchetti & Rocco Ciciretti, 2009. "Corporate social responsibility and stock market performance," Applied Financial Economics, Taylor & Francis Journals, vol. 19(16), pages 1283-1293.
    3. Edy Supriyono & Abdul Kharis Almasyhari & Djoko Suhardjanto & S. Rahmawati, 2015. "The impact of corporate governance on corporate social disclosure: comparative study in South East Asia," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 8(2), pages 143-161.
    4. Nan Sun & Aly Salama & Khaled Hussainey & Murya Habbash, 2010. "Corporate environmental disclosure, corporate governance and earnings management," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(7), pages 679-700, July.
    5. Maria-Gaia Soana, 2011. "The Relationship Between Corporate Social Performance and Corporate Financial Performance in the Banking Sector," Journal of Business Ethics, Springer, vol. 104(1), pages 133-148, November.
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    7. Mohammad Badrul Muttakin & Arifur Khan & Mohammad I Azim, 2015. "Corporate social responsibility disclosures and earnings quality: Are they a reflection of managers’ opportunistic behavior?," Managerial Auditing Journal, Emerald Group Publishing, vol. 30(3), pages 277-298, March.
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    10. Leuz, Christian & Nanda, Dhananjay & Wysocki, Peter D., 2003. "Earnings management and investor protection: an international comparison," Journal of Financial Economics, Elsevier, vol. 69(3), pages 505-527, September.
    11. Yongtao Hong & Margaret Andersen, 2011. "The Relationship Between Corporate Social Responsibility and Earnings Management: An Exploratory Study," Journal of Business Ethics, Springer, vol. 104(4), pages 461-471, December.
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    Cited by:

    1. Eugene Burgos Mutuc & Jen-Sin Lee & Fu-Sheng Tsai, 2019. "Doing Good with Creative Accounting? Linking Corporate Social Responsibility to Earnings Management in Market Economy, Country and Business Sector Contexts," Sustainability, MDPI, Open Access Journal, vol. 11(17), pages 1-1, August.

    More about this item

    Keywords

    Corporate Social Responsibility; Earnings Management; Profitability; Banking Sector; Indonesia;

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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