Does corporate social responsibility mitigate earnings management?

Gaio, Cristina; Gonçalves, Tiago; Sousa, Maria Verónica

doi:10.1108/md-05-2021-0719

Cited by 24 publications

(4 citation statements)

References 62 publications

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“…The sample period is from 2008 to 2019. We have not incorporated utilities and financial firms since they are subjected to intense surveillance, and the essence of their activities is considerably distinct (Chen et al ., 2016; Gaio et al ., 2022). The final sample consists of 390 unique firms.…”

Section: Methodsmentioning

confidence: 99%

Corporate social responsibility and dividend policy in India

Dahiya

Singh

Chaudhry

2023

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PurposeThe study investigates the relationship between corporate social responsibility (CSR) and dividend policy in the context of Indian firms, as well as how regulatory interventions in the form of mandated CSR can moderate this relationship.Design/methodology/approachA sample of the largest 500 companies listed on the National Stock Exchange from 2008 to 2019 is used in the study. The authors employ the system generalized method of moments since this estimation technique yields accurate and consistent findings in a dynamic panel data setting.FindingsThe authors find that CSR is positively associated with dividend payments. Increased incomes and lower financial constraints are the likely factors causing this relationship. Additional analysis suggests that the positive relationship is stronger for mature firms and for firms with higher information asymmetry. Financial reporting quality works in tandem with CSR to boost dividends. Regulatory interventions in the form of mandated CSR weaken the relationship. Finally, the speed of adjustment of dividends is relatively faster for socially responsible firms.Practical implicationsThe positive association between CSR and dividends suggests that the interest of shareholders and other non-financial stakeholders can be reconciled. Additionally, businesses should attempt to strategically implement their CSR plans in accordance with the requirements of Section 135 of the Companies Act, 2013 to avoid any unfavourable moderating effects of the legislation. The results also show that CSR disclosures complement rather than serve as a substitute for financial disclosures.Originality/valueThe study is the first to evaluate the relationship between CSR and dividends in the context of India, which is a pioneer in passing legislation that mandates CSR for firms surpassing a threshold. The authors also identify financial constraints as a channel through which CSR affects dividends.

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Section: Methodsmentioning

confidence: 99%

Corporate social responsibility and dividend policy in India

Dahiya

Singh

Chaudhry

2023

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“…The nature of responsibility is determined by the relationships that stakeholders have with the organization, being, therefore, a normative variant in which there is little room for description and explanation in a context of presentation of measurable social and environmental indicators. The second variant is used in a strictly organization-centered manner and relates to empirical responsibility (Parmar et al, 2010;Gaio et al, 2022;. The organization selects a or group of stakeholders that it believes needs to be managed for the benefit of the organization.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Determining Factors For Social and Environmental Practices of Corporate Responsibility in Mozambique

Madime¹,

Gonçalves²

2022

RGSA

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Purpose: This study analyzes the main factors that determine the adoption of social and environmental practices in companies operating in Mozambique. To this end, it analyzes the perception of managers about the pressure, motivation and barriers they face for these practices. Theoretical framework: Corporate Social Responsibility (CSR) is based on legitimacy, stakeholder and institutional theories. The stakeholder theory has two variants: one that concerns the attention to all stakeholders in the activities of the organization; the second is understood in a strictly organization-centered manner and relates to empirical responsibility. The latter coincides with the concept of legitimacy theory where they try to ensure that their activities are perceived as being legitimate. In institutional theory, the dependence of an organization creates isomorphisms of structure, climate and behavioral focus. Method/design/approach: The data were collected through a stratified sampling survey according to the size and nature of the activities, using Likert type questions. Constructs of Pressure, Internal Motivation and Barriers to CSR practices were assessed, as well as compliance with social and environmental practices. A number of 227 representative responses of Mozambican business fabric were obtained. To analyze the data and test the conceptual model presented, we used the PLS (Partial Least Squares) methodology. Results and conclusion:. The results show that there is little pressure from stakeholders and society in general, low motivation of the agents responsible for practicing social and environmental actions and that they recognize that barriers exist, but do not have a significant effect on the decision to adopt CSR practices. It was also found that in the CSR analysis, social practices should be seen separately from environmental practices. Research implications: The study argues that managers consider the multi-factors involved in CSR. It also points to important contributions to the definition of economic policies and institutional designs, particularly in developing countries, to leverage CSR practices. Originality/value: This study contributes to the literature by demonstrating that, although there are positive conditions, negative factors (barriers) in the determination of social and environmental practices should not be neglected. Additionally, the conclusions presented differ significantly from the results obtained in geographies of developed countries, thus contributing to the understanding of the determining factors in African countries, which has been less studied, and in particular in Mozambique, to which we contribute in a pioneering way.

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“…Previous studies have examined the relationship between CSR and relevant business facets, such as earnings management (Gaio et al. , 2022) and firm performance (Al-Shammari et al.…”

Section: Introductionmentioning

confidence: 99%

“…Previous studies have examined the relationship between CSR and relevant business facets, such as earnings management (Gaio et al, 2022) and firm performance (Al-Shammari et al, 2022;Ho et al, 2021). There are different ways in which the benefits of CSR can be assessed, but its ultimate purpose is to help a firm stand out from its competitors (McWilliams et al, 2006;Fontoura and Coelho, 2021) or to cut costs or both (Weber, 2008;Christmann, 2000).…”

Section: Introductionmentioning

confidence: 99%

Corporate social responsibility, business strategy and governance performance

Elmassri

Kuzey

Uyar

et al. 2023

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PurposeThis study aims to examine the effect of corporate social responsibility (CSR) adoption on differentiation and cost leadership strategies and how governance structure moderates this CSR–strategy relationship.Design/methodology/approachThe study data were retrieved from Thomson Reuters for non-financial firms between 2013 and 2019, and a fixed-effects panel regression analysis was executed.FindingsThe results indicate that CSR fosters cost leadership strategy but weakens differentiation strategy. This result supports the value generation school for cost leaders but also confirms the agency theory perspective for differentiators. Moreover, the governance structure does not moderate the relationship between a firm's CSR engagement and its business strategy, which implies a lack of corporate policies that concurrently consider both its CSR investment and strategies.Research limitations/implicationsThe findings of this study imply that cost leaders can integrate CSR practices into their business strategy and use their CSR engagement to increase their competitive position by stimulating cost efficiency and creating greater turnover. On the contrary, for differentiators, there is a trade-off between environmental and social engagement and business strategies. Thus, they are advised to enrich their unique product development abilities through the integration of environmental and social practices and reinforce their competitive position by addressing stakeholders' interests. The practical implication of the moderation analysis is that there is no rooted corporate policy behind the connection between CSR and firm strategy for both cost leaders and differentiators, which constitutes a missing link.Originality/valueThe findings of this study are of critical importance for firms, offering justification for the integration of two vital perspectives: social and environmental sustainability and financial sustainability. The moderating effect of governance performance tests the upper echelon's role in maintaining both sustainability perspectives concurrently and strengthening the legitimacy of the firms in society. Although maintaining a business strategy is important for shareholders' interests, pursuing a social and environmental sustainability strategy is crucial for meeting the expectations of all stakeholders.

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Does corporate social responsibility mitigate earnings management?

Cited by 24 publications

References 62 publications

Corporate social responsibility and dividend policy in India

Corporate social responsibility and dividend policy in India

Determining Factors For Social and Environmental Practices of Corporate Responsibility in Mozambique

Corporate social responsibility, business strategy and governance performance

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