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Corporate social responsibility and earnings management in U.S. banks

Vassiliki Grougiou, Stergios Leventis, Emmanouil Dedoulis and Stephen Owusu-Ansah

Accounting forum, 2014, vol. 38, issue 3, 155-169

Abstract: Business decision making depends on financial reporting quality. In identifying the drivers of financial reporting quality, proxied by earnings management (EM), prior literature has drawn attention to the association between corporate EM practices and commitment to corporate social responsibility (CSR). Empirical evidence, however, provides inconclusive results regarding the direction of this association. Using simultaneous equations, we examine the bi-directional CSR–EM relationship in U.S. commercial banks. We demonstrate that, although banks that engage in EM practices are also actively involved in CSR, the reverse relationship is not significant. We provide implications for investors, analysts, business participants and regulators.

Keywords: Ethics; Corporate social responsibility; Earnings management; Banking institutions (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:accfor:v:38:y:2014:i:3:p:155-169

DOI: 10.1016/j.accfor.2014.05.003

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