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The relationship between corporate social responsibility disclosure and earnings management: is it a complement mechanism or a substitute mechanism?

Author

Listed:
  • Faisal Faisal
  • Alif Rishal Prasetya
  • Anis Chariri
  • Haryanto Haryanto

Abstract

Prior literature has provided inconclusive results concerning the relationship between corporate social responsibility disclosure (CSRD) and earnings management (EM). This study examines the relation between CSRD and EM. For this study, 479 annual reports of publicly listed Indonesian companies were selected as the sample. The two-stage least square (2SLS) method was employed to test the relationship between CSRD and EM. Our findings suggest that companies that have high CSRD are less likely to manage earnings. Moreover, our findings suggest that the relationship between CSRD and EM can be viewed as a substitute mechanism. This study contributes to the accounting literature by examining the relationship between CSRD and EM in the setting of an emerging country.

Suggested Citation

  • Faisal Faisal & Alif Rishal Prasetya & Anis Chariri & Haryanto Haryanto, 2018. "The relationship between corporate social responsibility disclosure and earnings management: is it a complement mechanism or a substitute mechanism?," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 13(1), pages 1-14.
    • Handle: RePEc:ids:ijbget:v:13:y:2018:i:1:p:1-14
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    Citations

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    Cited by:

    1. Moalla Marwa & Bassem Salhi & Anis Jarboui, 2020. "Environmental Audit and Environmental Disclosure Quality," Scientific Annals of Economics and Business (continues Analele Stiintifice), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 67(1), pages 93-115, March.
    2. Tesfaye T. Lemma & Mehrzad Azmi Shabestari & Martin Freedman & Mthokozisi Mlilo, 2020. "Corporate carbon risk exposure, voluntary disclosure, and financial reporting quality," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 2130-2143, July.
    3. Helen LaVan & Lori S. Cook & Ivana Zilic, 2021. "An analysis of the ethical frameworks and financial outcomes of corporate social responsibility and business press reporting of US pharmaceutical companies," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 15(3), pages 326-355.
    4. Yamina Chouaibi & Ghazi Zouari, 2022. "The effect of corporate social responsibility practices on real earnings management: evidence from a European ESG data," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 19(1), pages 11-30, March.

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