Firms’ earnings smoothing, corporate social responsibility, and valuation

Gao, Leilei; Zhang, Joseph H.

doi:10.1016/j.jcorpfin.2015.03.004

Cited by 185 publications

(136 citation statements)

References 50 publications

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“…Markets are sceptical to the controversies generated by these firms. However, the result contradicted with [102] who highlighted that a high CSR may experience a high contemporaneous earnings-return relationship and great Tobin's Q. The impact of control variables on valuation measures were consistent with the ESG Composite Score model presented in Table 6.…”

Section: Esg Composite Model and Corporate Financial Performancementioning

confidence: 60%

Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms

et al. 2019

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This study examines the impact of firms' environmental, social and governance (ESG) initiatives on financial performance. It also compares the valuation effects of corporate social performance initiatives in developed and emerging market firms. The study was based on ESG ranking scores in the Thomson Reuters database, and the sample comprised 1317 emerging market firms and 3569 developed market firms. In comparison with developed market firms, emerging market firms had higher ESG combined scores, ESG Controversy scores, category scores of resources use, workforce, human rights and corporate social responsibility strategy scores. This study finds that stakeholder initiatives positively impact valuation effects, based on all sample results. Firm-generated controversies may decrease valuation effects in the stock market. Results indicated that ESG initiatives have a significant positive to the firm performance. The presence of independent board members and ownership by investors is a positive determinant for value creation. The adoption of best practice corporate governance principles is an important determinant of the valuation of firms. Firms' propensity to use defence mechanisms decreases valuation effects. Developed market firms received positive valuation effects due to ESG initiatives.Sustainability 2020, 12, 26 2 of 21 pollution abatement, which would lead to value creation in the form of improved productivity, corporate reputation and market share. The stakeholder theory assumes much significance to define the appropriate casual relationships between CSP and CFP [4,5]. The trade-off hypothesis indicates that resource allocation aimed at achieving social goals may add to the costs for the firms and prevent profit maximisation. Traditional theorists indicated that CSP and CFP are negatively related [6,7].In a modern context, firms must focus on profitability, growth potential and social relationships to emerge successful [8,9]. A social relationship reflects a firm's diverse commitment to its stakeholders other than profitability and growth potential. It encompasses diverse relationships, such as social, governance and environmental initiatives. The firm's investment in socially responsible behaviour, such as investments directed towards pollution reduction efforts or energy saving technologies, positively impacts financial performance.The principles of CSR indicated that firms have moral obligations towards society, which are beyond the concept of profit maximisation [10]. Firms create environmental costs through their business operations and are responsible for alleviating these problems [11]. Firms' socially responsible actions can serve business interests and enhance financial performance [12,13].Social responsibility has great significance and relevance in academia and business management. About 50% of the global institutional asset base was managed by Principles for Responsible Investment signatories, demonstrating the commitment of financial markets towards the adoption of ESG criteria for investment de...

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Section: Esg Composite Model and Corporate Financial Performancementioning

confidence: 60%

Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms

et al. 2019

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“…Kim, Park, and Wier (, 790) argue that “CSR activities are motivated by managers’ incentives to be honest, trustworthy, and ethical.” Numerous studies document that CSR ratings tend to be higher for firms that behave more ethically (Kim et al. ; Hoi, Wu, and Zhang ; Gao, Lisic, and Zhang ; Gao and Zhang ). Also, asset holding decisions of ethical investing funds are often based on “selecting stocks that meet superior CSR standards” (Renneboog, Ter Horst, and Zhang , 1728).…”

Section: Resultsmentioning

confidence: 99%

Gambling Attitudes and Financial Misreporting

Christensen¹,

Jones

Kenchington

2017

Contemporary Accting Res

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We investigate whether attitudes toward gambling help explain the occurrence of intentional misreporting. Similar to gambling, some financial reporting choices involve taking deliberate, speculative risks. We predict that in places where gambling is more socially acceptable, managers will be more likely to take financial reporting risks that increase the likelihood the financial statements will need to be restated. To test this prediction, we exploit geographic variation in local gambling attitudes and find that restatements due to intentional misreporting are more common in areas where gambling is more socially acceptable. This association is even stronger in situations where management is under greater pressure to misreport, including when the firm is close to meeting a performance benchmark, experiencing poor financial performance, or under investment‐related pressure. Furthermore, these results are robust to numerous tests to address omitted variables and endogeneity. Collectively, these findings suggest gambling attitudes help explain the incidence of intentional misreporting.

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“…GHRM practices play an important role not only in improving employee well‐being but also in enhancing organizational performance. GHRM practices also enhance the organization's reputation in the marketplace (Renwick et al ., ; Willness and Jones, ; Gao and Zhang, ). These practices are tools to improve HRM abilities to attract job seekers who prefer organizations that have a good environmental reputation.…”

Section: Theoretical Background and Hypotheses Developmentmentioning

confidence: 99%

The Role of Corporate Support for Employee Volunteering in Strengthening the Impact of Green Human Resource Management Practices on Corporate Social Responsibility in the Egyptian Firms

Kerdawy

2018

European Management Review

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Green human resource management (GHRM) and corporate social responsibility (CSR) have recently gained more attention in the business world. This study aims to investigate the role of corporate support for employee volunteering (CSEV) in strengthening the impact of GHRM on adopting CSR practices of the best 30 firms registered in EGX100 at the Egyptian stock exchange and engaged with CSR activities. Therefore, a conceptual framework was proposed to list theoretical concepts of GHRM, CSEV and CSR to form hypotheses. Data were collected from 326 respondents occupying the highest managerial positions in the studied firms. Using a structural equation model (SEM), the results indicate that both GHRM and CSEV influence positively on adopting CSR activities. Furthermore, CSEV plays a positive moderating role in strengthening the impact of GHRM on adopting CSR in the studied firms. These findings and their managerial implications were discussed in theory and practice.

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Firms’ earnings smoothing, corporate social responsibility, and valuation

Cited by 185 publications

References 50 publications

Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms

Corporate Social Performance and Firm Performance: Comparative Study among Developed and Emerging Market Firms

Gambling Attitudes and Financial Misreporting

The Role of Corporate Support for Employee Volunteering in Strengthening the Impact of Green Human Resource Management Practices on Corporate Social Responsibility in the Egyptian Firms

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