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The Effect of CSR Policy on Earnings Management Behavior: Evidence from Visegrad Publicly Listed Enterprises

Author

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  • Marek Nagy

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia)

  • Katarina Valaskova

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia)

  • Pavol Durana

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia)

Abstract

A corporate socially responsible-focused approach adds value to a firm in the form of financial benefits in addition to improving its corporate image. To meet the demands of various stakeholders, including consumers, employees, and shareholders, and to produce high-quality financial reporting, some managers participate in CSR initiatives. The investigation of the relationship between corporate social responsibility and earnings management in publicly listed Visegrad companies is the main aim of the paper. The purpose is to identify the correlation between the CSR concept (measured by ESG score) and earnings management behavior determined by discretionary accrual levels (using the modified Jones model). To ascertain the association between CSR and earnings/discretionary accrual levels or to describe the major changes in the development of these variables, several statistical techniques were applied (correlation analysis, one-way ANOVA, and one-way ANOVA with repeated measures). As this is a pioneering study in the Visegrad environment (analyzing 35 publicly listed enterprises reporting ESG score), the research findings may have significant policy implications for decision-makers, regulators, auditors, and investors in their efforts to restrict earnings management techniques and enhance the quality of financial reporting.

Suggested Citation

  • Marek Nagy & Katarina Valaskova & Pavol Durana, 2022. "The Effect of CSR Policy on Earnings Management Behavior: Evidence from Visegrad Publicly Listed Enterprises," Risks, MDPI, vol. 10(11), pages 1-14, October.
    • Handle: RePEc:gam:jrisks:v:10:y:2022:i:11:p:203-:d:952810
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    References listed on IDEAS

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    Cited by:

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    2. Dominika Gajdosikova & Katarina Valaskova & Tomas Kliestik & Maria Kovacova, 2023. "Research on Corporate Indebtedness Determinants: A Case Study of Visegrad Group Countries," Mathematics, MDPI, vol. 11(2), pages 1-30, January.

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