Corporate social responsibility, earnings management and industry type : does CSR reinforce entrenchment strategy?
Managers could opportunistically misuse corporate social responsibility (CSR) to obfuscate earnings management (EM) by reporting more CSR activities that eventually accomplished stakeholders’ advocacy as their demands on CSR are satisfied. Likewise, sensitive industries have a higher commitment to...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2022
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| Online Access: | http://journalarticle.ukm.my/19549/1/49899-187528-1-PB.pdf http://journalarticle.ukm.my/19549/ https://ejournal.ukm.my/pengurusan/issue/view/1530 |
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| Summary: | Managers could opportunistically misuse corporate social responsibility (CSR) to obfuscate earnings
management (EM) by reporting more CSR activities that eventually accomplished stakeholders’ advocacy as their
demands on CSR are satisfied. Likewise, sensitive industries have a higher commitment to CSR to appease their
stakeholders’ adverse reactions to the nature of their business. This study examines the relationship between EM
and sensitive industries on CSR (proxied by the quality of CSR disclosure) and the moderating role of sensitive
industries in the relationship between EM and CSR. Employing multiple regression analysis on Malaysian public
listed companies for the year 2016, this study finds an insignificant association between EM and CSR, a positive
association between sensitive industries companies and CSR and sensitive industries moderate the relationship
between EM and CSR. This study offers practical implications for companies to strengthen their corporate
governance mechanisms and for investors to cautiously evaluate the companies’ ethics. |
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