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Corporate environmental disclosure, corporate governance and earnings management

Author

Listed:
  • Nan Sun
  • Aly Salama
  • Khaled Hussainey
  • Murya Habbash

Abstract

Purpose - The purpose of this paper is to examine the association between corporate environmental disclosure (CED) and earnings management (EM) and the impact of corporate governance (CG) mechanisms on that association. Design/methodology/approach - The paper uses performance‐matched discretionary accruals (DA) as a measure of EM. The paper also uses ordinary least square regression with robust standard errors to examine the association between CED and EM for a sample of 245 UK non‐financial firms for the financial year ended on March 2007. Three different theoretical frameworks are used to identify the expected association between CER and EM. These include: signalling, agency and stakeholder‐legitimacy theories. Findings - The paper finds no significant statistical association between various measures of DA and environmental disclosure. The paper also finds that some CG attributes affect the relationship between CER and EM. Practical implications - The result suggests that UK corporate managers are not using environmental disclosure as a technique to reduce the probability that public policy actions will be taken against their companies. Originality/value - Since most empirical research is limited to the US setting, this paper provides a novel contribution to the existing literature, as one of the first to examine this issue in the UK.

Suggested Citation

  • Nan Sun & Aly Salama & Khaled Hussainey & Murya Habbash, 2010. "Corporate environmental disclosure, corporate governance and earnings management," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 25(7), pages 679-700, July.
    • Handle: RePEc:eme:majpps:02686901011061351
    DOI: 10.1108/02686901011061351
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    Citations

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    Cited by:

    1. Claudia Arena & Saverio Bozzolan & Claudia Imperatore, 2024. "Enhancing environmental reporting: A study on the role of narrative disclosure, firm‐ and country‐level incentives," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(4), pages 3414-3428, July.
    2. Ines Ben Jazia & Maali Kachouri, 2024. "Board Size as a Mediator in the Relationship Between Corporate Social Responsibility and Audit Quality: Insights from Europe," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 91-112.
    3. V. Veeravel & E. K. S. Sadharma & Bandi Kamaiah, 2024. "Do ESG disclosures lead to superior firm performance? A method of moments panel quantile regression approach," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(1), pages 741-754, January.
    4. Sun, Guanglin & Li, Ting & Ai, Yongfang & Li, Qinghai, 2023. "Digital finance and corporate financial fraud," International Review of Financial Analysis, Elsevier, vol. 87(C).
    5. Rasmi Meqbel & Mohammad Alta'any & Salah Kayed & Ahmed Al‐Omush, 2024. "Earnings management and sustainability assurance: The moderating role of CSR committee," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1769-1785, May.
    6. Marko Aleksić & Branimir Kalaš & Nenad Đokić & Nikola Milićević & Nemanja Berber, 2024. "The Mediation Effect of Customer Satisfaction in the Relationship between CSR and Financial Performance: An Empirical Study in Large Companies in Serbia," Sustainability, MDPI, vol. 16(18), pages 1-15, September.
    7. Maria Aluchna & Maria Roszkowska‐Menkes & Sana Khan, 2024. "Corporate governance perspective on environmental reporting: Literature review and future research agenda," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1550-1577, May.
    8. Ali Meftah Gerged & Khaldoon Albitar & Lara Al‐Haddad, 2023. "Corporate environmental disclosure and earnings management—The moderating role of corporate governance structures," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2789-2810, July.
    9. Chaima Kouba & Anis Ben Amar & Maali Kachouri, 2024. "Earnings Management and Corporate Social Responsibility: Moderating Effect of Managerial Entrenchment Evidence from France," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 60-86.

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