Corporate transparency under pressure: the association between corporate social responsibility disclosure and earnings management in contexts of political instability

Earnings management is a significant concern in financial reporting, as it has the potential to mislead stakeholders and distort a company’s actual performance. This study aims to examine the effect of Corporate Social Responsibility (CSR) disclosure and Chief Executive Officer (CEO) tenure on earnings management, while also evaluating the moderating role of independent commissioners. A quantitative approach was adopted, employing multiple linear regression and Moderated Regression Analysis (MRA), based on 124 firm-year observations from 31 manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2020–2023 period. The findings reveal that CSR disclosure does not significantly influence earnings management (p = 0.089 > 0.05), suggesting that CSR activities are not effectively mitigating manipulative financial reporting. In contrast, CEO tenure has a significant positive effect on earnings management (β = 0.094; p = 0.001 < 0.05), indicating that longer-serving CEOs are more likely to engage in such practices. Furthermore, independent commissioners significantly moderate the relationship between CSR disclosure and earnings management (β = –1.689; p = 0.004), while their moderating effect on the relationship between CEO tenure and earnings management is not statistically significant (p = 0.350 > 0.05). These results emphasize the need to strengthen internal governance mechanisms to promote greater transparency in CSR reporting and to deter opportunistic behavior by executive leadership.

Purpose- The purpose of the study is to examine the association between corporate social responsibility (CSR) disclosure and the practice of earnings management in the listed state-owned enterprises (SOEs) of Bangladesh. Methodology- All the listed SOEs (17 firms) of Dhaka Stock Exchange (DSE) for the years 2017-2022 were considered in the study, resulting in observations of 102 firm-years. Content analysis was used to assess the level of CSR disclosure in the annual reports. For measuring earnings management, Beneish M-score model was used as the proxy variable. To investigate the association between CSR disclosure and earnings management, multivariate regression analysis was conducted using pooled OLS model, random effects model and lag model. Findings- The regression outcomes of the study found a positive and significant association between CSR disclosure and earnings management. This study shows how managers can use CSR disclosures as a competitive advantage by manipulating earnings while also fostering positive relationships with stakeholders. Conclusion- Investors and governments alike are increasingly demanding ethical business practices and full disclosure from corporations. The study concludes that managers' opportunistic behavior is a primary motivation for using CSRD to cover their tracks. This study will provide valuable insights to the policy-makers, regulators, investors and other stakeholders on how CSR reporting can be used as a medium to hide management’s manipulative practices and, why it is important to implement a more comprehensive guideline on CSR reporting and effective governance to eliminate such practices.

The Effect of Ownership Structure and Iso 14001 Certification on Corporate Social Responsibility Disclosure with Company Size as A Moderating Variable

PurposeThis paper explores the relationship between earnings management and firms' value through the moderating effect of the missing elements – corporate social responsibility (CSR) disclosure and state ownership in Russian companies. The main argument of the paper is that CSR disclosure can be used as a mitigating mechanism to weaken the negative relationship between earnings manipulation and market value. Additionally test whether state ownership is an important moderating factor in this relationship are conducted as state has always played an important role in the emerging Russian market.Design/methodology/approachThe hypotheses are tested on panel data for 223 publicly listed Russian firms for the period 2012–2018. A number of robustness tests are used to check the obtained results for consistency. Following previous research GMM method is employed to address endogeneity concerns.FindingsSupported by stakeholder theory, it is observed that firms that disclosed more CSR information experience a weaker negative relationship between earnings management and market value because investors and other stakeholders positively evaluate a positive CSR image. This negative effect of earnings management on market value is even weaker for state-owned companies as market participants appreciate involvement of state-owned companies in CSR activities and place greater expectations on these firms to be responsible without clear understanding whether these actions are “window dressing” for this type of companies or not.Originality/valueThe study results provide new insights into the relation between earnings management, firm's value, CSR disclosure and state ownership in emerging-market firms. The paper highlight the importance of considering country-specific factors, such as state ownership, while analysing the market reaction on CSR disclosure and earnings management since the institutional peculiarities may help to explain differences in the obtained results.

Background: Enron was considered a strong corporate social performer when their infamous accounting scandal emerged in 2000. Literature suggests that companies use corporate social responsibility (CSR) to disguise corporate misconduct. Aim and Setting: This study examines one type of corporate misconduct, namely, earnings management (EM). Prior studies have found significant associations between CSR performance and EM; however, none of these studies controlled for CSR disclosure. This study unbundles the effects of CSR performance and CSR disclosure on EM. To examine the relationship between CSR performance and CSR disclosures and EM of listed South African companies. Methods: A company included on the Socially Responsible Investment (SRI)1 index is used as an indicator of CSR performance. Four measures of CSR disclosure are used. Results and conclusion: The study tests both CSR performance and CSR disclosure against both real earnings management (REM) and accrual-based earnings management (AEM). CSR performance and earnings management: Companies with better CSR performance were more likely to engage in EM through income increasing discretionary accruals. This suggests that managers who inflate earnings may engage in CSR activities to avoid unwanted scrutiny from stakeholders. Companies with better CSR performance were less likely to engage in REM, suggesting that managers with better CSR performance regard the management of earnings through accruals that reverse in the next period less incriminating than managing earnings through actual company resources. CSR disclosure and earnings management: Companies that integrated their CSR disclosures more into their annual report engaged less in income decreasing discretionary accruals, suggesting that managers with incentives to make more CSR disclosures to reduce information asymmetry will also be less inclined to manage earnings.

This study aims to examine and analyze empirically the effect of earnings management on Corporate Social Responsibility disclosure and the role of audit quality as proxied by the size of the accounting firm and auditor industry specialization in moderating the relations between earnings management and CSR disclosure. This study uses secondary data with samples of 69 manufacturing companies in the basic industry and chemical sectors listed on the Indonesia Stock Exchange from 2017 to 2019 which were obtained using purposive sampling method. The independent variable in this study is earnings management with Discretionary Accruals as proxy which measured using Modified Jones Model. While the dependent variable in this study is the disclosure of Corporate Social Responsibility, which is proxied by CSR disclosure index (CSRI) measured based on indicators of GRI-G4 disclosure. The moderating variable in this study, there is audit quality as proxied by the size of the accounting firm and auditor industry specialization which is measured using dummy variables, the value of 1 is for The Big Four KAP and auditor industry specialization, while the value of 0 is for Non The Big Four KAP and unspecialized industry auditors. The analysis of data in this study is using a simple linear regression model and Moderated Regression Analysis (MRA) to decide the hypothesis. The value of 1 is for The Big Four KAP and auditor industry specialization, while the value of 0 is for Non The Big Four KAP and unspecialized industry auditors. The analysis of data in this study is using a simple linear regression model and Moderated Regression Analysis (MRA) to decide the hypothesis. The value of 1 is for The Big Four KAP and auditor industry specialization, while the value of 0 is for Non the Big Four KAP and unspecialized industry auditors. The analysis of data in this study is using a simple linear regression model and Moderated Regression Analysis (MRA) to decide the hypothesis. The results of this study reveal that earnings management has a positive and significant effect on Corporate Social Responsibility (CSR) disclosure and the size of the accounting firm (KAP) variable can be a moderating in the relations between earnings management and CSR disclosure. Meanwhile, the auditor industry specialist variable can't moderate the relations between earnings management and CSR disclosure.

Purpose– This paper aims to explore the relationship between corporate social responsibility (CSR) disclosures and earnings quality proxied by earnings accruals. Specifically, we examine whether CSR disclosures are context-specific, that is, whether companies dominated by powerful stakeholders are obliged to behave in a responsible manner to constrain earnings management, thereby reporting higher-quality earnings to investors.Design/methodology/approach– This paper explores the relationship between CSR disclosures and earnings quality proxied by earnings accruals. Specifically, we examine whether CSR disclosures are context-specific, that is, whether companies dominated by powerful stakeholders are obliged to behave in a responsible manner to constrain earnings management, thereby reporting higher-quality earnings to investors.Findings– Results show that managers in an emerging economy manage earnings when they provide more CSR disclosures. Such earnings management is achieved through income increasing discretionary accruals. Furthermore, companies from export-oriented industries dominated by powerful stakeholders (international buyers) disclosing more CSR activities, provide transparent financial reports through constraining earnings management.Originality/value– The findings of this study are significant for both investors and policymakers. Investors should not take for granted that firms engage in CSR activities, behave ethically and provide transparent financial reports. As we document that firms might manipulate earnings through discretionary accruals and provide less transparent financial reports to shareholders, the credibility of firms’ CSR policies should be assessed with caution. Policies directing at promoting socially responsible practices instead of motivating the desired behaviour, may provide managers with additional incentives to utilise CSR for opportunistic behaviour. Thus, policymakers need to be cautious about this opportunistic behaviour and enhance monitoring to enforce social compliance. Possibly, some guidelines can be introduced to confirm that CSR disclosures are based on actual practice and not just a “green wash” statement to deceive stakeholders.

This paper explores the relationship between earnings management and firms’ value through the moderating effect of two missing elements—corporate social responsibility (CSR) disclosure and internationalisation. The main argument of the paper is that CSR disclosure can be used as a mitigating mechanism to weaken the negative relationship between earnings manipulation and market value. We tested our hypotheses on panel data for 223 publicly listed Russian firms for the period 2012–2018. Supported by legitimacy and stakeholder theory, we observed that firms that disclosed more CSR information experienced a weaker negative relationship between earnings management and market value because investors positively perceived their attempts to improve their socially responsible image. This negative effect was even weaker for firms that internationalised and had larger numbers of stakeholders, which placed greater expectations on firms to be transparent and responsible. Our results provide new insights into earnings management, CSR disclosure, and the internationalisation of emerging-market firms.

PurposeThis study aims to investigate the extent and nature of corporate social responsibility (CSR) disclosure in the context of Jordan. It also empirically examines the impact of board composition variables (size, independent [non-executive] directors, CEO/chairman duality, age and gender) and ownership structure variables (board ownership concentration, institutional ownership and foreign ownership) on CSR disclosure level.Design/methodology/approachA CSR disclosure index is constructed, and content analysis is used to analyze the extent and nature of CSR disclosure in the annual reports of Jordanian manufacturing companies listed on the Amman Stock Exchange (ASE) during the period (2013-2015). Regression analysis using panel data is undertaken to analyze the potential impact of board composition and ownership structure on CSR disclosure level.FindingsThe results reveal that, on average, a listed Jordanian manufacturing company has disclosed 30.8 per cent of the 42 items of CSR information included in the disclosure index. In addition, there was a very slight improvement in the CSR disclosure over the study period. These results suggest there is considerable room for improvement in CSR disclosure. The regression analysis identified board size to be significantly and positively associated with CSR disclosure level. On the other hand, the percentage of independent (non-executive) directors on the board, duality of CEO and chairman positions, director’s age, board ownership concentration and the percentage of shares outstanding held by institutional shareholders were found to have had a significant negative impact on CSR disclosure level.Originality/valueThe study contributes to the literature on CSR practice and disclosure in various ways. First, it demonstrates the extent to which listed companies in developing countries, such as Jordan, take their social role seriously. Second, the study adds to the existing literature on the potential impact of board composition and ownership structure on CSR disclosure by using new variables that have not been tested before using Jordanian data. Third, the study is anticipated to provide feedback to Jordanian regulators in the Jordan Securities Commission and the ASE on the adequacy of current regulations on corporate disclosure requirements in Jordan. Finally, the study raises some issues of interest to other researchers who are currently or intend to conduct research in this area.

The purpose of this study is to provide empirical evidence of the effect of disclosure of corporate social responsibility, earnings management, and family ownership on the cost of debt. The population in this study were manufacturing companies in the basic and chemical industrial sectors, which were listed on the Indonesia Stock Exchange (IDX) from 2016-to 2019, and the sample was determined using a random sampling method with the slovin formula so that the number of samples obtained was 136 companies. This type of analysis is a secondary causal analysis obtained through the company's website, and the annual report is accessed on the Indonesia Stock Exchange website. The analysis method uses multiple regression. The results of the study indicate that the Disclosure of Corporate Social Responsibility and Earnings Management does not affect the Cost of Debt.

The aims of the study is to know the effect of conservatism accounting, corporate social responsibility (CSR) disclosure and tax avoidance on earnings management. In this study variable of conservatism accounting was proxy by accrual. Variable of CSR disclosure was proxy by corporate social responsibility index (CSRI) which refers to guidelines CSRI version GRI-G4 and GRI Standard. Variable of tax avoidance was proxied by CETR. The sample used in this research was mining companies listed in the Indonesia Stock Exchange (henceforth, IDX) from 2015–2017. Used purposive sampling, 13 companies were selected from total of 39 data. To analysis the data, this study used descriptive statistics and data panel regression analysis with software eviews7. The finding showed that, as simultaneously, conservatism accounting, CSR disclosure, and tax avoidance influenced earnings management. However, as partially, conservatism accounting influenced earnings management, while CSR disclosure, and tax avoidance did not influence earnings management. Company management can design an advanced implementation mechanism by not carrying out tax planning that is illegal and can be detrimental to the State, and does not worsen the company's image and reputation in the public eye. The financial accounting standards board must enact regulations that can minimize tax avoidance and earnings management. This regulation is needed to increase the responsibility of management and accountants in the credibility of financial statements.

This study investigates the relationship between Corporate Social Responsibility (CSR) disclosure and ownership structure in listed insurance companies on the Colombo Stock Exchange. Focusing on 25 high-performance firms from 2019 to 2023, the research examines how institutional, foreign, and managerial ownership influence CSR practices. Regression analysis is employed to assess these relationships. The findings reveal that both institutional and foreign ownership have a significant positive effect on CSR disclosure. Specifically, institutional investors, driven by a focus on long-term performance and sustainability, and foreign investors, motivated by global standards and regulatory compliance, push for more transparent and robust CSR practices. These ownership types are linked to greater CSR disclosure, measured through enhanced reporting on social and environmental issues, improved stakeholder communication, and adherence to international CSR frameworks. In contrast, managerial ownership shows a negligible impact on CSR disclosure, suggesting that managers may prioritize financial performance or other internal goals over CSR objectives. This study makes a unique contribution to the literature by demonstrating how different ownership structures directly influence CSR practices in emerging markets, such as Sri Lanka’s insurance sector. It highlights that institutional and foreign ownership can drive improvements in corporate transparency, while managerial ownership may not be a significant catalyst for CSR engagement. The implications of these findings are particularly relevant for stakeholders, including policymakers, corporate managers, and investors. Policymakers should consider encouraging institutional and foreign ownership to foster stronger CSR practices. For corporate managers, aligning ownership structures with CSR goals can enhance both corporate reputation and long-term financial success. Investors, particularly institutional and foreign, can leverage their influence to ensure that companies prioritize CSR in line with global expectations. This research provides critical insights into the role of ownership in shaping CSR disclosure in emerging markets, contributing to the broader discourse on corporate governance and accountability.

Corporate social responsibility (CSR) disclosure issues have been extensively discussed in past studies. In Malaysia studies that examine the factors affecting CSR disclosure by the company using the Resource-Based View (RBV) theory are still scarce. This study provides an insight into the factors affecting CSR disclosure of the companies in the context of RBV. Using CSR disclosure indeces of 150 Malaysian public listed companies in sensitive industries published in their 2007 annual reports, this study examines the relationship between investments and the chief executive officers' (CEO) international experience with CSR disclosure. The findings show that there is a significant positive relationship between investment and CSR disclosure. This implies investors will choose to invest in companies with good CSR disclosure since they feel greater confidence on their investments being secure. However, there is an insignificant relationship between the CEOs' international experiences with CSR disclosure. Thus, a company whose CEO has extensive international experience does not hold any advantage over a homegrown CEO in improving CSR disclosure.

The objectives of this study are; firstly, to examine the effect of profitability on Corporate Social Responsibility (CSR) disclosure; secondly, to examine the effect of leverage on CSR disclosure; thirdly, to examine the effect of company size on CSR disclosure; fourth, to find out whether the effect of leverage on CSR disclosure will be more significant with the inclusion of the variable of majority ownership as moderating variable; fifth, to find out whether the effect of profitability on CSR disclosure will be more significant with the inclusion of the variable of majority ownership as moderating variable. The sample was taken using a purposive sampling technique with 50 manufacturing companies during the period 2011- 2012 which fulfilled the required criteria as the research sample. They were analyzed moderation regression analysis approach. It shows that, first, profitability has positive effect on CSR disclosure; second, leverage has no effect on CSR disclosure; third, company size has an effect on CSR disclosure; fourth, majority ownership moderates the effect of leverage on CSR disclosure; fifth, majority ownership does not moderate the effect of profitability on CSR disclosure. Some limitations stated in this study are expected to be used as references for the improvement of similar studies in the near future.

Corporate social responsibility (CSR) disclosures have gained great attention both in media and academic community. In this paper, we check if socially responsible firms adopt transparent financial reporting strategy, or opportunistically manipulate accounting figures. Using a sample of 34 listed companies during five years (2010-2014), our results show a positive relationship between abnormal accruals and the level of CSR disclosures thereby enhancing the opportunistic hypothesis of earnings management but not the transparent financial reporting hypothesis. By contrast, we find no relationship between CSR disclosures and the three real manipulation proxies: abnormal operating cash-flows, abnormal production costs and abnormal discretionary expenses. Moreover, there is a positive relationship between CSR disclosures and the extent of income smoothing consistent with the opportunistic perspective of earnings management. Overall, our study shows that opportunistic and transparent financial reporting perspectives are not mutually exclusive since earnings management practice conducted by socially responsible firms may be context-oriented.