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Earnings management, corporate social responsibility and governance structure: further evidence from Egypt

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  • Tarek Abdelfattah
  • Mostafa Elfeky

Abstract

This study investigates the relationship between earnings management and corporate social responsibility disclosure (CSRD). In addition, it investigates whether the joint effect of corporate governance and CSRD impacts earnings management practices in an emerging capital market, Egypt. Using a sample of non-financial firms listed in the Egyptian stock exchange for the period 2012-2017, we find evidence of the opportunistic hypothesis of corporate social responsibility. Firms use corporate social responsibility reporting to mask earnings management. Our findings show a significant role of board independence in constraining earnings management. Moreover, board independence moderates the positive relationship between CSRD and earnings management. However, other governance factors do not alleviate earnings management. Furthermore, we find that institutional ownership is positively related to discretionary accruals supporting the notion of the passive role of institutional investors in developing countries.

Suggested Citation

  • Tarek Abdelfattah & Mostafa Elfeky, 2021. "Earnings management, corporate social responsibility and governance structure: further evidence from Egypt," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 17(1/2), pages 173-201.
    • Handle: RePEc:ids:ijaape:v:17:y:2021:i:1/2:p:173-201
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