Sustainability Engagement and Earnings Management: The Italian Context

Francesco Grimaldi, Alessandra Caragnano, Marianna Zito and Massimo Mariani
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Francesco Grimaldi: Department of Economics and Finance, University of Bari Aldo Moro, 70124 Bari, Italy
Alessandra Caragnano: Department of Management, LUM Jean Monnet University, 70010 Casamassima (Bari), Italy
Marianna Zito: Department of Management, LUM Jean Monnet University, 70010 Casamassima (Bari), Italy
Massimo Mariani: Department of Management, LUM Jean Monnet University, 70010 Casamassima (Bari), Italy

Sustainability, 2020, vol. 12, issue 12, 1-16

Abstract: This study aims at exploring the effect of sustainability engagement on earnings management (EM) practices with particular reference to the Italian context in the year 2018, after the implementation of Legislative Decree No. 254/2016 on the disclosure of non-financial information. This is in line with the Sustainable Development Goals (SDGs) promoted by United Nations in 2015 and specifically with SDG 12 and relative target 12.6 focusing on the adoption of sustainable practices and the integration of sustainability information into reporting on the behalf of companies. We analyzed a sample of 60 companies listed on the Italian Stock Exchange. Our results suggest that there is a slight negative relationship between sustainability engagement and earnings management practices. Indeed, our evidence shows that companies characterized by higher level of sustainability engagement are less prone to advance EM practices. To the best of our knowledge, this is the first research to investigate the effect of the sustainability engagement on EM practices with reference to a sample of Italian listed companies.

Keywords: sustainable development; SDGs; sustainability engagement; ESG score; financial information; non-financial information; earnings management (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:12:p:4881-:d:371784

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