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What Earnings Management Has to Do with Corporate Social Responsibility

Author

Listed:
  • Ann Kristin Meyer

    (Chair for Management, Accounting and Corporate Governance, University of Siegen, 57076 Siegen, Germany)

  • Andreas Dutzi

    (Chair for Management, Accounting and Corporate Governance, University of Siegen, 57076 Siegen, Germany)

Abstract

With the continuing rise of attention towards societal challenges like, e.g., climate change, Corporate Social Responsibility (CSR) becomes an increasingly important topic for companies. While there is no question that CSR activities are on the rise, the connection towards Earnings Management in companies is less clear. Therefore, this research paper not only aims to provide an up-to-date picture on the literature addressing this interconnection, but also provides a profound base for a more solid theoretical framework. Thus, it delivers a critical basis for further empirical analyses in this field. In order to illustrate this interconnection between those two topics, this paper presents an SLR analysis of articles published in the Chartered Association of Business Schools (CABS) or Australian Business Deans Council (ABDC), focusing on empirical analyses of CSR performance and Earnings Management. Overall, it can be stated that CSR performance has a negative influence on Accrual-Based Earnings Management, while findings on the influence on Real Earnings Management are contradicting. Furthermore, the relationship of CSR performance and Accrual-Based Earnings Management/Real Earnings Management is especially vague when the used methods are moderated by different variables such as family involvement or managerial entrenchment. While the connection between Accrual-Based Earnings Management and CSR performance is widely covered in the existing literature, the relationship between Real Earnings Management and CSR performance is clearly less outlined. This research paper makes key contributions to the existing literature, as it combines and structures results of conducted studies during the last ten years and elaborates on the differences on commonalities of the results. This analysis also suggests that other factors that possibly influence Earnings Management or CSR should be included in a future research model for upcoming analyses. It places the findings of earlier studies into the context of the Ethical Approach, creating a roadmap for the future.

Suggested Citation

  • Ann Kristin Meyer & Andreas Dutzi, 2024. "What Earnings Management Has to Do with Corporate Social Responsibility," Sustainability, MDPI, vol. 16(7), pages 1-24, March.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:7:p:2836-:d:1365960
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    References listed on IDEAS

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