Investigating the Relationship between Corporate Social Responsibility and Earnings Management: Evidence from Spain | Zendy

Gras-Gil Ester | Zendy; Manzano Mercedes Palacios | Zendy; Fernández Joaquín Hernández | Zendy

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Investigating the Relationship between Corporate Social Responsibility and Earnings Management: Evidence from Spain

Author(s) -

Gras-Gil Ester,

Manzano Mercedes Palacios,

Fernández Joaquín Hernández

Publication year - 2016

Publication title -

business research quarterly

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.995

H-Index - 26

eISSN - 2340-9444

pISSN - 2340-9436

DOI - 10.1016/j.brq.2016.02.002

Subject(s) - corporate social responsibility , stakeholder , accounting , business , sample (material) , social responsibility , earnings management , reputation , corporate governance , stakeholder theory , public relations , earnings , finance , political science , chemistry , chromatography , law

This article investigates the relationship between corporate social responsibility and earnings management. Using panel data methodology for a sample of Spanish non-financial companies between 2005 and 2012, we find a negative impact of corporate social responsibility practices on earnings management. Corporate social responsibility is related to ethical and moral issues concerning corporate decision-making. Engaging in socially responsible activities not only improves stakeholder satisfaction, but also has a positive effect on corporate reputation. The results show that corporate social responsibility practices may be an organizational device that leads to more effective use of resources, which then has a negative impact on earnings management practices.

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