IDEAS home Printed from https://ideas.repec.org/a/taf/oabmxx/v9y2022i1p2130134.html
   My bibliography  Save this article

Real earnings management and capital structure: Does environmental, social and governance (ESG) performance matter?

Author

Listed:
  • Yusuf Adeneye
  • Ines Kammoun

Abstract

This paper examines the impact of real earnings management (REM) on the capital structure of listed firms across ASEAN countries using the fixed effects panel data estimator for the period 2014–2019. Prior literature has focused primarily on aggregate real earnings management, overlooking the disaggregated sources of EM from real activities. It also investigates the role of environmental, social, and governance (ESG) performance on the impact of REM on leverage. We find that REM has a significant positive effect on leverage. It also finds that REM sourced from abnormal production costs and abnormal discretionary expenses have positive impacts on leverage. In contrast, abnormal cash flows from operating activities do not significantly influence leverage. On the role of ESG performance, we find that REM significantly and positively affects leverage in firms with low ESG performance and across ESG pillar scores. However, REM does not affect leverage in high- ESG performing firms, except for the governance pillar score. This suggests that ASEAN firms exhibit weak corporate governance as sustainable behaviours may not reduce the agency cost of debt. Our results are robust to a battery of tests. Our results have implications for the stakeholder theory in that it attenuates the agency costs of earnings manipulations.

Suggested Citation

  • Yusuf Adeneye & Ines Kammoun, 2022. "Real earnings management and capital structure: Does environmental, social and governance (ESG) performance matter?," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2130134-213, December.
    • Handle: RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2130134
    DOI: 10.1080/23311975.2022.2130134
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23311975.2022.2130134
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23311975.2022.2130134?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thamir Al Barrak & Kaouther Chebbi & Abdullah A. Aljughaiman & Mohammed Albarrak, 2023. "Exploring the Interplay between Sustainability and Debt Costs in an Emerging Market: Does Financial Distress Matter?," Sustainability, MDPI, vol. 15(12), pages 1-19, June.
    2. Wadhaah Ibrahim Almubarak & Kaouther Chebbi & Mohammed Abdullah Ammer, 2023. "Unveiling the Connection among ESG, Earnings Management, and Financial Distress: Insights from an Emerging Market," Sustainability, MDPI, vol. 15(16), pages 1-23, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oabmxx:v:9:y:2022:i:1:p:2130134. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://cogentoa.tandfonline.com/OABM20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.