The relationship between managerial entrenchment and firm <scp>risk‐taking</scp> on social responsibility disclosure

Salehi, Mahdi; Dashtbayaz, Mahmoud Lari; Abdulhadi, Karrar Hamzeh

doi:10.1002/pa.2511

Cited by 17 publications

(11 citation statements)

References 41 publications

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“…It was the first study that examines the relationship between CSR and tax avoidance in an international setting with different legal and institutional environment. Based on these studies, Salehi et al (2020aSalehi et al ( , 2020b examine whether firm risk-taking affects the relationship between managerial entrenchment and CSR in two developing countries (the Iran side and Iraq side) during 2011-2017. The results show that in firms with higher risk-taking, there is a strong relationship between managerial entrenchment and social responsibility both in the Iranian and Iraqi firms.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…According to the agency theory, external auditing is one of the effective control mechanisms to constrain opportunistic behaviors and to provide a reasonable assurance on the quality of Corporate social responsibility and tax avoidance corporate disclosure (Watts and Zimmerman, 1983;Becker et al, 1998;Blackwell et al, 1998;Kanagaretnam et al, 2016;Salehi et al, 2020aSalehi et al, , 2020b.…”

Section: Csr Performance and Corporate Tax Avoidance: The Moderation ...mentioning

confidence: 99%

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Corporate social responsibility and tax avoidance: the case of French companies

Abid

Dammak²

2021

JFRA

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Purpose The purpose of this paper is to shed light on the effect of tax avoidance on corporate social responsibility performance. It also investigates whether audit quality affects tax avoidance practices by socially responsible performance. Design/methodology/approach Based on a sample of French non-financial companies over the period 2005 to 2016, this paper uses panel data regressions. The authors apply generalized least square panel regression to overcome autocorrelation and heteroscedasticity problems. For further robustness, this paper runs instrumental variable regressions using the three-stage instrument variable method (three-stage least square). Findings The results show that firms with high CSR scores are more likely to engage in aggressive tax avoidance. The findings also show that firms audited by high-quality auditors are more likely to get involved in CSR for hedging against the potential consequences of aggressive tax avoidance practices. Research limitations/implications The findings are consistent with risk management theory, which suggests that firm’s hedge against any reputational risks that might arise from avoiding taxes by engaging more in CSR. Practical implications Results have implications for policymakers in that CSR firms audited by high-quality auditors may engage in CSR to overcome any negative reactions that could be caused as a result of tax avoidance. Thus, they need to be cautious about managers’ opportunistic behavior and enhance monitoring to enforce social compliance and to be tax compliant. Originality/value This paper extends the existing literature by examining the effect of audit quality on the relationship between CSR performance and corporate tax avoidance. Audit quality is deemed to be an important governance feature that is likely to constraint managerial opportunistic behaviors. Audit quality, along with CSR performance, are associated with a higher level of tax avoidance.

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Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Csr Performance and Corporate Tax Avoidance: The Moderation ...mentioning

confidence: 99%

Corporate social responsibility and tax avoidance: the case of French companies

Abid

Dammak²

2021

JFRA

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“…Salehi et al (2020a) show a significant relationship between managerial entrenchment and social responsibility disclosure and firm risk‐taking in the Iranian and Iraqi Stock Exchange. Moreover, no relationship was evident between social responsibility disclosure and firm risk‐taking.…”

Section: Theoretical Principles and Literature Reviewmentioning

confidence: 99%

The relationship between management entrenchment and financial statement fraud

Seifzadeh

Rajaeei

Allahbakhsh

2021

JFM

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Purpose This study aims to assess the relationship between managerial entrenchment and the chance of fraud in financial statements, which are the only available source for shareholders’ decisions, so their accuracy and reliability are of great importance. Hence, the realization of contributing factors to preventing financial information distortion is vital. Moreover, managerial entrenchment on the chance of fraud in the company’s upcoming years has also been analyzed. Design/methodology/approach The factor analysis of five variables [chief executive officer (CEO) duality, managerial ownership, board independence, board compensation and CEO tenure] is used for management entrenchment. To examine the hypothesis testing, multivariate regressions, feasible general least squares regression and Logit model regression are used. The statistical sample under study in this paper includes 1,122 year-company observations during 2013–2018 and Beneish’s (1999) model is used for evaluating fraud. Findings The study results show a negative and significant relationship between management entrenchment and the chance of fraud in financial statements. That means managers with a higher degree of managerial entrenchment are more likely to create value and acquire wealth for the firm, and that causes them not to waste and waste the firm resources through enhancing the supervisory mechanisms. Moreover, the study results also show that improving and strengthening management entrenchment will lower the upcoming years’ fraud condition. Originality/value The current paper is the first time that the relationship between managerial entrenchment and financial statement fraud is assessed within a study. The results of the paper help the beneficiaries and shareholders realize different aspects of management entrenchment. That means managers’ power and authority can be used to make shareholders’ interests, but they can hinder misuse and fraud.

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“…Firms face business risks in their operations (Blanc Alquier & Lagasse Tignol, 2006;Dvorsk et al, 2021;Salehi & Ghasempour, 2021;Li et al, 2021), and even in management and decision-making itself (Salehi et al, 2020a(Salehi et al, , 2020bSalehi & Arianpoor, 2021). In early studies Prahalad and Hamel (1990) argued that uniqueness and differentiation will lead to excellent corporate performance, sustained competitive advantage, and are important ideas for strategic management.…”

Section: The Impact Of Corporate Strategy Deviation On Operational Risk From Within Firmsmentioning

confidence: 99%

Corporate Strategy Deviation and Institutional Investor Recognition: Complex Network-Based and Graph Clustering Analysis

Lin

Liu

Лю

2021

Technological and Economic Development of Economy

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In this paper, the quantitative analysis is implemented on the relationship between strategy deviation of listed firms and institutional investors’ recognition. For research methodology, financial complex networks and clustering techniques are employed to measure the de-gree of recognition by creating links to the common stockholding behaviour of institutional investors. Besides, quarterly panel data from 2006 to 2020 are constructed for an innovative study of the degree of recognition of institutional investors’ strategy deviation of listed firms under different innovation fields, firm properties, and market style heterogeneity and asymmetry. The stability test is conducted by the transformation of the measures and methods, thereby effectively avoiding the “cluster fallacy”. We validate the mechanism by which the differences in strategic choices and propensities of listed firms affect capital market recognition, and enrich the microscopic research perspective and methodology on related issues.

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The relationship between managerial entrenchment and firm risk‐taking on social responsibility disclosure

Cited by 17 publications

References 41 publications

Corporate social responsibility and tax avoidance: the case of French companies

Corporate social responsibility and tax avoidance: the case of French companies

The relationship between management entrenchment and financial statement fraud

Corporate Strategy Deviation and Institutional Investor Recognition: Complex Network-Based and Graph Clustering Analysis

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