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Corporate Social Responsibility and Internal Control Effectiveness
Author(s) -
Kim Young Sang,
Kim Yura,
Kim HyunDong
Publication year - 2017
Publication title -
asia‐pacific journal of financial studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.375
H-Index - 15
eISSN - 2041-6156
pISSN - 2041-9945
DOI - 10.1111/ajfs.12172
Subject(s) - corporate social responsibility , accounting , business , control (management) , transparency (behavior) , accountability , social responsibility , propensity score matching , public relations , economics , management , political science , statistics , mathematics , law
This study empirically examines whether corporate social responsible firms exhibit more effective internal control over financial reporting. Specifically, we investigate whether socially responsible firms apply business practices to ensure financial transparency and accountability for their stakeholders. Using various measures of corporate social responsibility ( CSR ) and a battery of robust regression analysis over the period from 2004 to 2012, we find that CSR firms are more likely to have effective internal control under Section 404 of the Sarbanes‐Oxley Act ( SOX ). Our results are robust to the propensity matching of firm characteristics, considering various measures of CSR , and adjusting for several endogenous problems.