Association of Corporate Social Responsibility Performance and Earnings Management: Evidence from China

• In Event: International Accounting

Abstract

This research examines the association of corporate social responsibility (CSR) performance and quality of financial reporting for a set of state owned (SOE) and non-state owned (NSOE) enterprises in China. We find that non-state-owned Chinese firms engaging in a higher level of CSR activities are associated with higher discretionary accruals and are more likely to report a small increase in earnings. These results are consistent with the private firms in China engaging in social responsibility practices based on opportunistic incentives and CSR disclosure being used by these firms as a window-dressing tool for earnings management.

Authors

• Hua-Wei Huang, National Cheng Kung University

• Wei Jiang, California State University, Fullerton

• Vijay Karan, California State University, Fullerton

• Yi-Hong Lin, National Cheng Kung University