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The Role of the Institutional Framework in the Relationship between Earnings Management and Corporate Social Performance

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  • Khine Kyaw
  • Mojisola Olugbode
  • Barbara Petracci

Abstract

This study examines the influence of the institutional framework of European countries: more specifically coordinated market economies and liberal market economies on the earnings management and corporate social performance nexus. Employing econometric models impervious to endogeneity, our results show that socially responsible firms (particularly those with high governance scores) in coordinated market economies engage in earnings management. These findings suggest that in countries in which institutional settings enable implicit undertakings of corporate social responsibility in firm policies, firm practices ostensibly related to corporate social performance may serve purposes other than meeting stakeholders' ethical expectations and those of society at large. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment

Suggested Citation

  • Khine Kyaw & Mojisola Olugbode & Barbara Petracci, 2017. "The Role of the Institutional Framework in the Relationship between Earnings Management and Corporate Social Performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 24(6), pages 543-554, November.
    • Handle: RePEc:wly:corsem:v:24:y:2017:i:6:p:543-554
    DOI: 10.1002/csr.1426
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    2. Roberto Maglio & Andrea Rey & Francesco Agliata & Rosa Lombardi, 2020. "Connecting earnings management and corporate social responsibility: A renewed perspective," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(2), pages 1108-1116, March.
    3. Cristina Gaio & Tiago Cruz Gonçalves, 2022. "Gender Diversity on the Board and Firms’ Corporate Social Responsibility," IJFS, MDPI, vol. 10(1), pages 1-16, February.
    4. Eduardo Ortas & Isabel Gallego‐Álvarez & Igor Álvarez, 2019. "National institutions, stakeholder engagement, and firms' environmental, social, and governance performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(3), pages 598-611, May.
    5. Winston Jerónimo Silvestre & Ana Fonseca, 2020. "Integrative Sustainable Intelligence: A holistic model to integrate corporate sustainability strategies," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1578-1590, July.

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