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The relationship between corporate social responsibility, financial misstatements and SEC enforcement actions

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  • Nam Tran
  • Don O'Sullivan

Abstract

This study explores the relationship between corporate social responsibility (CSR), financial misstatements and SEC enforcement actions. We find that firms with higher CSR are less likely to receive SEC enforcement actions for financial misstatements. Drawing on insights from stakeholder theory and the reputational literature, we identify two channels underpinning this relationship: (i) firms with higher CSR are less likely to engage in financial misstatements and (ii) the reputational effect of CSR reduces the likelihood of SEC enforcement actions. We find empirical evidence consistent with both channels.

Suggested Citation

  • Nam Tran & Don O'Sullivan, 2020. "The relationship between corporate social responsibility, financial misstatements and SEC enforcement actions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 1111-1147, April.
    • Handle: RePEc:bla:acctfi:v:60:y:2020:i:s1:p:1111-1147
    DOI: 10.1111/acfi.12404
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    3. Atreya Chakraborty & Lucia S. Gao & Prianka Musa, 2023. "Corporate social responsibility and litigation risk: Evidence from securities class action lawsuits," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(2), pages 1785-1819, June.
    4. Mohammad Hendijani Zadeh & Michel Magnan & Denis Cormier & Ahmad Hammami, 2021. "Does corporate social responsibility transparency mitigate corporate cash holdings?," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 19(1), pages 63-87, December.

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