Corporate Social Responsibility and Financial Fraud: The Moderating Effects of Governance and Religiosity

Li, Xing; Kim, Jeong‐Bon; Wu, Haibin; Yu, Yangxin

doi:10.1007/s10551-019-04378-3

Cited by 36 publications

(27 citation statements)

References 52 publications

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“…Therefore, those selected companies did not have the motivation to opportunistically use CSR as the entrenchment mechanism to conceal their opportunistic behaviour since they were not involved in extreme or severe EM practices, which may have led to this insignificant relationship with CSR. This result aligns with the previous study that postulated CSR increased significantly due to the motivation to conceal misconduct and coordinate with the companies' fraudulent activities (Li et al 2021). These findings also serve as timely evidence on the current state of EM practices in Malaysia.…”

Section: Resultssupporting

confidence: 90%

“…Such managers will be inclined to over-invest to manage the conflicts of interest and disguise their irrational actions (Cumming et al 2016;Pawlina & Renneboog 2005). A recent study by Li et al (2021) documented that companies committed higher CSR during the fraud committing period than during the non-fraudulent period. In this regard, recognising that CSR could be the mechanism that can build trust and confidence, managers resort to over-investing in CSR to strengthen the entrenchment (Cespa & Cestone 2007;Li et al 2021;Prior et al 2008;Surroca & Tribo 2008).…”

Section: Literature Review Earnings Management and Corporate Social R...mentioning

confidence: 99%

“…Besides CSR delivering favourable media coverage, managers promote their sustainable actions to convince and please the stakeholders, especially the media and the politicians (Cespa & Cestone 2007). They also aim to obscure their unethical managerial discretion (Li et al 2021;Pakawaru et al 2021); safeguard their leadership position and minimise or avoid costly boycotts and activism and conspire with stakeholders to reinforce their entrenchment strategy (Gargouri et al 2010;Martinez-Ferrero et al 2016;Shafai et al 2018). Stakeholders who are also a part of the board could exert their power on the discontented shareholders by protecting the incumbent managers.…”

Section: Hypotheses Development Earnings Management and Corporate Soc...mentioning

confidence: 99%

“…These literatures deduced that companies that received higher public scrutiny and stakeholder activism changed their CSRD by increasing the level of disclosure which consistent with the increased stakeholder awareness and pressure. Similarly, EM is directly associated with CSRD with the notion of obfuscating their misconduct (Gargouri et al 2010;Li et al 2021;Martinez-Ferrero et al 2016;Pakawaru et al 2021;Shafai et al 2018). EM leads to better CSRD in the effort of deflecting stakeholders' attention from their unethical managerial discretion.…”

Section: Earnings Management and Corporate Social Responsibility: The...mentioning

confidence: 99%

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Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?

2022

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Managers could opportunistically misuse corporate social responsibility (CSR) to obfuscate earnings management (EM) by reporting more CSR activities that eventually accomplished stakeholders' advocacy as their demands on CSR are satisfied. Likewise, sensitive industries have a higher commitment to CSR to appease their stakeholders' adverse reactions to the nature of their business. This study examines the relationship between EM and sensitive industries on CSR (proxied by the quality of CSR disclosure) and the moderating role of sensitive industries in the relationship between EM and CSR. Employing multiple regression analysis on Malaysian public listed companies for the year 2016, this study finds an insignificant association between EM and CSR, a positive association between sensitive industries companies and CSR and sensitive industries moderate the relationship between EM and CSR. This study offers practical implications for companies to strengthen their corporate governance mechanisms and for investors to cautiously evaluate the companies' ethics.

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Section: Resultssupporting

confidence: 90%

Section: Literature Review Earnings Management and Corporate Social R...mentioning

confidence: 99%

Section: Hypotheses Development Earnings Management and Corporate Soc...mentioning

confidence: 99%

Section: Earnings Management and Corporate Social Responsibility: The...mentioning

confidence: 99%

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Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?

2022

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“…Firms are more likely to cover up their misconduct through CSR from an opportunistic behavior perspective. Li et al (2021) show that managers within low ethical firms will actively try to find ways to improve CSR performance when fraudulent fraudulent activities are taking place, in an attempt to make a big deal out of CSR activities in order to use the benefits of CSR to conceal their fraudulent financial reporting veracity. However, in this research, we did not explore whether corporations employ CSR activities to conceal fraudulent conduct in order to minimize regulators' and stakeholders' suspicions regarding corporate financial wrongdoing in this study.…”

Section: Discussionmentioning

confidence: 99%

Corporate social responsibility and corporate financial fraud: evidence from China

Wang

Yustina

Hajanirina

et al. 2022

JAAF

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<p class="Normal0">With the development of globalization, corporate social responsibility has become a hot subject of shared concern for all nations in the globe. The lack of CSR performance in modern China has prompted worries about CSR in both academic and practical circles in China. In this work, the authors continue Liao's research and seek to re-analyze if CSR is connected to financial fraud. Through the analysis of A-share companies in the construction industry listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, this paper finds that CSR scores are negatively correlated with financial fraud activities, which suggests that CSR companies are less likely to engage in financial fraud. Thus, to some degree, it may also argue that CSR is an ethical activity that has the power to minimize corporate financial misbehavior.</p>

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Corporate governance and corporate carbon disclosures: The moderating role of earnings management

Khuong,

Tai,

Thao

et al. 2024

Corp Soc Responsibility Env

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This research aims to explore the relationship between corporate governance (CG) and carbon disclosure (CD) and the moderating role of earnings management (EM) in this relationship. The model was built based on legitimacy theory, upper echelons theory, and agency theory. We employed a two‐step generalized method of moments (GMM) regression and conducted robust tests to reaffirm the results using panel data from 134 listed companies in the Vietnamese stock market from 2015 to 2022. Our findings indicate that larger board sizes, boards with more independent members or the presence of a CEO who concurrently serves as the chairman of the board can potentially decrease the likelihood of CD, while companies with a higher proportion of female board members or regular board meetings may tend to publish more carbon information. Furthermore, EM can moderate the relationship between CG and CD, and this variable exhibits high reliability in the model. This research adds to the vast body of existing knowledge about the effectiveness of CG by investigating how different dimensions of CG affect corporate CDs in Vietnam, especially, to the best of the authors' knowledge, this is the first research attempting to provide the empirical result of the moderating role of EM in the relationship between CG and corporate CDs.

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Corporate Social Responsibility and Financial Fraud: The Moderating Effects of Governance and Religiosity

Cited by 36 publications

References 52 publications

Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?

Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?

Corporate social responsibility and corporate financial fraud: evidence from China

Corporate governance and corporate carbon disclosures: The moderating role of earnings management

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