Accounting conservatism and corporate social responsibility

Anagnostopoulou, Seraina C.; Tsekrekos, Andrianos Ε.; Voulgaris, Georgios

doi:10.1016/j.bar.2020.100942

Cited by 34 publications

(41 citation statements)

References 136 publications

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“…Since information asymmetry also generates demand for conditional AC (LaFond & Watts, 2008), a company with stronger CSR performance will likely face lower demand for CAC as well. This result is consistent with that of the study by Anagnostopoulou et al (2020), which found a negative relationship between conditional conservatism and CSR. Conversely, our results contradict the results found in the research work of Guo et al (2020), who state that socially responsible companies exhibit more AC than their non-CSR companies, which is consistent with stakeholder theory.…”

Section: Additional Robustness Analysissupporting

confidence: 93%

“…Given the mixed results regarding the effect of the adoption of CSR and IC systems on AC, little research has examined their relationships (Anagnostopoulou et al 2020;Guo et al, 2020;Shen et al, 2020).We extend the AC literature by examining the effect of adopting both CSR and IC on CAC in the French context. EU reforms have led to major changes, especially in the accounting systems of countries including those of France, which are anchored in the accounting tradition.…”

Section: Introductionmentioning

confidence: 95%

“…In addition, Khan and Watts (2009) estimate the regression of Basu (1997) and consider the coefficient of Basu as a linear function of the characteristics specific to the company; namely, its size, MTB ratio, and debt. The measure of conservatism proposed by Basu (1997) has formed the basis of various studies that assess the level of conservatism (Anagnostopoulou et al 2020;Ball et al, 2000;Givoly and Hayn, 2000;Hong, 2020;Mitra et al, 2013;Moy et al, 2020;Shen et al, 2020;Yin et al, 2020). It is considered the most popular measure in the accounting literature (Ryan, 2006;Wang et al, 2008).…”

Section: The Dependent Variable: Acmentioning

confidence: 99%

“…CFO is the ratio of cash flow from operating activities to total assets (Goh & Li, 2011;Guo et al, 2020;Hong, 2020;Mitra et al, 2013). BIG Fouris a binary variable coded 1 if the company is audited by at least one firm belonging to the BIG Four network (Anagnostopoulou et al 2020;Chouaibi & Boulhaga, 2020;Guo et al, 2020;Shen et al, 2020).…”

Section: 22mentioning

confidence: 99%

“…Measurement of independent and control variables IC is adummy variable coded 1 if the company discloses information on IC weaknesses, and 0 otherwise (Boulhaga et al, 2022;Goh & Li, 2011); data on IC weaknesses were collected manually from financial reports and reference documents published on the French listed companies' websites (Ji et al, 2016). CSRis measured by the ESG score retrieved from Thomson Reuters ASSET4 ESG (Boulhaga et al, 2022;Lahouel et al, 2019;Yang & Baasandorj, 2017).Company size corresponds to the logarithm of total assets (Anagnostopoulou et al 2020;Goh & Li, 2011;Guo et al, 2020;Mitra et al, 2013). LEV is measured by the ratio of long-term debt deflated by total assets (Hong, 2020;Mitra et al, 2013;Shen et al, 2020).…”

Section: 22mentioning

confidence: 99%

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The effect of internal control and corporate social responsibility on conditional accounting conservatism: Evidence from France

Boulhaga

Elbardan

Elmassri

2022

J Corp Accounting Finance

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This study examines the impact of internal control (IC) and corporate social responsibility (CSR) on conditional accounting conservatism (CAC). We employ legitimacy theory to understand whether managers adopt CSR reports and IC systems to seek legitimacy through symbolic actions or whether they do so to provide substantive actions to their stakeholders.We adopt a multivariate analysis for a sample of 98 French companies belonging to the SBF 120 index during the period between 2012 and 2021. All accounting and stock market information is extracted from the Thomson Reuter database (Datastream) and the Thomson Reuters ASSET4 ESG database. We found that both IC and CSR have a negative and significant impact on CAC; hence, managers may use CAC levels as a legitimizing tool for corporate activities. French companies are generally characterized by strong IC systems, suggesting a low demand for conditional conservatism. Socially responsible companies may have fewer agency issues and therefore will not practice accounting conservatism (AC) in a pronounced way. Distinct from the previous literature, our study examines the impact of IC as well as CSR on CAC, which provides useful insights regarding how stakeholder pressure, in terms of reporting on social responsibility and maintaining effective control systems, interacts with and impacts upon managers' decisions to adopt CAC in the French context. Given the position of France after Brexit and the new laws adopted regarding an emphasis on the social dimension in corporate reporting, protecting stakeholders' interests, and adopting conservatism, it is worth using such a context to gain a better understanding of AC, as this will enrich the literature.

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Section: Additional Robustness Analysissupporting

confidence: 93%

Section: Introductionmentioning

confidence: 95%

Section: The Dependent Variable: Acmentioning

confidence: 99%

Section: 22mentioning

confidence: 99%

Section: 22mentioning

confidence: 99%

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The effect of internal control and corporate social responsibility on conditional accounting conservatism: Evidence from France

Boulhaga

Elbardan

Elmassri

2022

J Corp Accounting Finance

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Do investors incorporate financial materiality? Remapping the environmental information in corporate sustainability reporting

Xie

Tanaka

Keeley

et al. 2023

Corp Soc Responsibility Env

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Although the consideration of financial materiality is important for securing shareholders' interests, the degree of financial materiality that is considered for existing sustainability ratings is still questionable. In this study, we hand‐mapped the financial materiality of environmental information based on Sustainability Accounting Standards Board (SASB) industry‐specific accounting metrics to reassess environmental performance. Based on the SASB‐based environmental score, we tested whether investors price environmental risk. The results show significant pricing anomalies related to environmental risk. Companies with lower SASB‐based environmental scores experience higher environmental risk. Additionally, a premium in the cross‐section of stock returns compensates for this risk. Our findings suggest that integrating financial materiality based on the SASB could be an effective way to capture corporate environmental risk.

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How do firms react to capital market liberalization? Evidence from ESG reporting greenwashing

Liu,

Qian,

Shi

et al. 2024

Corp Soc Responsibility Env

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Based on catering theory, this study employs a difference‐in‐differences model to investigate the impact of capital market liberalization on environmental, social, and governance (ESG) reporting greenwashing using mainland Hong Kong Connection Programs as a quasinatural experiment. Our findings indicate that corporate management increasingly engages in ESG reporting greenwashing in capital market liberalization to cater to foreign investors. This conclusion remains valid after controlling for endogeneity. Mechanistic analysis indicates that investor sentiment increases with capital market liberalization. In response, corporate management intensifies ESG reporting greenwashing to cater to foreign investors, and analysts' focus does not serve as a supervisory mechanism for restraining ESG reports greenwashing. Heterogeneity tests demonstrate that ESG reports greenwashing within the capital market diminishes for mandatory disclosure and state‐owned firms. However, ESG reports greenwashing intensifies among firms facing high financing constraints amid capital market liberalization. Overall, we identify a significant catering effect on ESG reporting amid capital market liberalization, offering a novel theoretical framework on greenwashing in ESG disclosures.

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Accounting conservatism and corporate social responsibility

Cited by 34 publications

References 136 publications

The effect of internal control and corporate social responsibility on conditional accounting conservatism: Evidence from France

The effect of internal control and corporate social responsibility on conditional accounting conservatism: Evidence from France

Do investors incorporate financial materiality? Remapping the environmental information in corporate sustainability reporting

How do firms react to capital market liberalization? Evidence from ESG reporting greenwashing

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