Earnings Management and Corporate Social Responsibility: Moderating Effect of Managerial Entrenchment Evidence from France

Chaima Kouba, Anis Ben Amar, Maali Kachouri
International Journal of Economics and Business Administration, Volume XII, Issue 1, 60-86, 2024
DOI: 10.35808/ijeba/833


Purpose: The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and Earnings Management. Furthermore, this paper aims to empirically examine the moderating role of managerial entrenchment (ME) on the effect of corporate social responsibility (CSR) and earnings management (EM). Design/methodology/approach: This study uses panel data set of 263 French companies for the period 2010-2019. All used regressions for the analysis are estimated based on panel data with fixed effects. Findings: Based on a panel data of 263 French firm-year observations during the period 2010-2019, the authors find a negative impact of CSR on earnings management, and some CSR dimensions negatively impact earnings management and the results show that EM positively moderates the impact of Corporate Social Responsibility on the Earnings Management. Practical implications: The results suggest several implications for regulatory actions in France, as well as those in other countries that try to implement CSR activities. Therefore, investors are more motivated to invest in socially responsible firms than socially irresponsible firms. Also, given the association of CSR with the quality of accounting information and financial markets, regulators should step up recommendations relating to the different societal dimensions of CSR. Originality/value: The originality of this work lies in the division of CSR into sub-dimensions. It enables the operationalization of CSR in a new way to determine the impact of CSR on earnings management.

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