Corporate Social Responsibility(CSR) and Real Earnings Management
Asian Tax Journal Vol. 14 No. 6 (2013), pp. 227-259
Abstract
This study investigates whether and how a firm’s earnings management through real activities is influenced by the activities of corporate social responsibility(CSR). 1,458 firm－year samples are selected from Korea composite stock price index(KOSPI) over 5 years(2006－2010), and divided into two groups by the propensity of CSR superiority. The samples are divided into another two groups, the continuous CSR group and the temporary CSR group, by the frequency propensity of the CSR activities. KEJI index is used for CSR variable, which is the unique measure of CSR in Korea. From the results, we find that companies with CSR superiority engage in less real earnings management than companies without CSR superiority. We also find that the continuous CSR group is associated with less real earnings management than the temporary CSR group. It means that the companies doing continuous CSR activities reveal better accounting transparency. Our results may be helpful for policy decisions of the CSR performing firms and the related agencies.
Keywords
- corporate social responsibility
- real earnings management
- agency theory
- stakeholder theory
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