Does Corporate Social Responsibility foster Earnings Management? The moderating role of firms’ political connections[La responsabilité sociale des entreprises favorise-t-elle la gestion des résultats ? Le rôle modérateur des connexions politiques des entreprises]

This paper examines the relationship between Earnings Management (EM) practices and Corporate Social Responsibility (CSR) and how this relationship is affected by political connection. Our study is motivated by conflicting evidence in the extant literature about the role of CSR in reducing earnings management. The key contribution of this paper is our investigation of the effects of political connection on the link between CSR engagement and EM. To our knowledge, no study in the accounting literature has explored this moderating effect of political connection on the CSR/EM relationship. Using a sample of 133 French companies listed on the CAC All Tradable index for the 2010-2020 period, our results verify a negative influence of CSR on EM with its different proxies. Which means that French firms with CSR in mind tends not to engage in EM operations. We also conclude that political connections moderate the relationship between CSR practices and EM. The results remain unchanged after a battery of robustness tests.