Corporate social responsibility, earnings management and firm performance: evidence from panel VAR estimation

Anderson, Mark; Hyun, Soonchul; Warsame, Hussein

doi:10.1007/s11156-023-01203-x

Cited by 6 publications

(2 citation statements)

References 99 publications

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“…However, more recent studies have investigated the impact of other factors (corporate social responsibility (CSR), ownership structure, audit, etc.) on earnings management, recognizing that the impact of this practice may vary depending on the amount or intensity of these factors [50][51][52][53][54][55][56][57][58]. For example, Ref.…”

Section: Empirical Review and Hypotheses' Developmentsmentioning

confidence: 99%

The Operational Risk Disclosure Threshold Effect in the Earnings Management–Sustainability Firm Performance Nexus in Saudi Arabia: A Dynamic Panel Threshold Regression Model

Alsulami

2024

Sustainability

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Although the relationship between earnings management and firm performance has been well explored in the literature, sustainable performance has not yet been examined. Furthermore, the literature has not addressed the issue of nonlinearity between earnings management and firm performance. Therefore, this paper aims to examine the potential nonlinear relationship between earnings management and sustainable firm performance in Saudi Arabia using a sample of 70 listed firms over the 2015–2022 period. Specifically, it investigates the operational risk disclosure threshold effect in the earning management–sustainable firm performance nexus. To do so, the dynamic panel threshold regression model (DPTR) is performed. The result proves that there is a threshold effect of operational risk disclosure in the relationship between earning management and sustainable firm performance. Specifically, the threshold values of operational risk disclosure for the three models are estimated at 6 between the low- and the high-operational-risk-disclosure regimes. In the lower regime, firm performance decreases when earning management increases; however, in the higher regime, firm performance increases when earning management increases. These outcomes support the predictions of agency and positive accounting theories.

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Section: Empirical Review and Hypotheses' Developmentsmentioning

confidence: 99%

The Operational Risk Disclosure Threshold Effect in the Earnings Management–Sustainability Firm Performance Nexus in Saudi Arabia: A Dynamic Panel Threshold Regression Model

Alsulami

2024

Sustainability

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“…Recent studies have indicated that there is a direct correlation between sustainability initiatives and financial success [3][4][5][6][7][8]. According to research conducted by Harvard Business Review, companies that prioritize sustainability tend to outperform their competitors over the long-term.…”

Section: Introductionmentioning

confidence: 99%

Sustainability Commitment Versus Earnings Management Practices: Saudi Insights

Al Barrak,

Kouaib

2024

Sustainability

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This paper aims to examine the impact of corporate sustainable management (CSM) on earnings management (EM) activities using annual data from 2018 to 2022 for 37 non-financial Saudi indexed firms. A multi-measure approach was utilized to proxy for EM (AEM and REM) and CSM (CSR sustainability reporting, CSR sustainability committee, CSR sustainability external audit, GRI report guidelines, ESG performance index). The empirical analysis employed pooled ordinary least squares (POLS) regression. The results suggest that CSM plays a significant role in reducing both AEM and REM practices, indicating that sustainability-oriented organizations mitigate EM activities. Furthermore, the study reveals a negative correlation between CSM and sales manipulation, overproduction, and cutting discretionary expenditures. This research supports the notion that companies prioritize sustainable management due to a focus on long-term strategies and transparency. This is the first work in the Middle East and Arab region, particularly in Saudi Arabia, investigating this association.

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The role of independent directors’ tenure and network in controlling real-earnings management practices

Asad,

Akbar,

Mollah

2024

Rev Quant Finan Acc

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Manipulating real activities is generally regarded as more damaging to a firm’s long-term growth and value than accrual-based manipulations. We consider this point of view and build on the agency theory framework for investigating the role of independent directors’ (INDs’) tenure and connection to several boards in controlling real-earnings management (REM) practices. We analyze a sample of UK listed non-financial companies over the period between 2005 and 2018. The potential endogeneity issue was controlled by the application of the two-step system-GMM estimations. The research findings suggest that REM was lower in those firms whose INDs were connected to several boards at a time. The findings also show that the association between INDs’ tenure and REM varied with the phases of their tenure. Directors in the early stage of their tenure are less effective at controlling REM, however, as their tenure grew, they generate better oversight over the management conduct, thereby reducing REM. Contrary to this, extended tenure is shown as positively associated with higher REM practices. The overall findings thus suggest that the board monitoring role protects the stakes of the shareholders by constraining REM when INDs have better expertise and rich information acquired through their presence on multiple boards—and when they have moderate board tenure, which is neither too short nor too long. We argue that due to the importance of the role of INDs in the current global scenario this study has policy implications.

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Corporate social responsibility, earnings management and firm performance: evidence from panel VAR estimation

Cited by 6 publications

References 99 publications

The Operational Risk Disclosure Threshold Effect in the Earnings Management–Sustainability Firm Performance Nexus in Saudi Arabia: A Dynamic Panel Threshold Regression Model

The Operational Risk Disclosure Threshold Effect in the Earnings Management–Sustainability Firm Performance Nexus in Saudi Arabia: A Dynamic Panel Threshold Regression Model

Sustainability Commitment Versus Earnings Management Practices: Saudi Insights

The role of independent directors’ tenure and network in controlling real-earnings management practices

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