Do Audit Fees Moderate the Relationship between CSR Reporting and Earnings Management

Abstract

The purposes of this study are to investigate the relationship between CSR reporting and earnings management as well as moderating effect of audit fees in the same relationship. Based on prior studies on CSR disclosure and global reporting initiatives guidelines, this research uses content analysis approach to assess the extent of CSR initiatives of the listed Bangladeshi banking companies of Dhaka Stock Exchange between 2010 and 2018. Also, this study uses discretionary accruals as a measure of earnings management. The findings state that there is a significant positive relationship between CSR reporting and earnings management and audit fees negatively moderate this relationship. From these points of view, the result recommends that high audit fees are likely to drive bank managers to generate high quality financial reports and confine to use CSR undertakings as a managerial opportunistic tool.