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Firm Performance, Corporate Social Responsibility and the Impact of Earnings Management during COVID-19: Evidence from MENA Region

Sharif Mohammad Aqabna (sharefa@hebron.edu), Mehmet Aga and Huthayfa Nabeel Jabari
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Sharif Mohammad Aqabna: Department of Accounting and Finance, Cyprus International University, Northern Cyprus, Mersin 10, Lefkosa 99040, Turkey
Mehmet Aga: Department of Accounting and Finance, Cyprus International University, Northern Cyprus, Mersin 10, Lefkosa 99040, Turkey
Huthayfa Nabeel Jabari: Department of Accounting and Finance, Hebron University, Hebron P.O. Box 40, Palestine

Sustainability, 2023, vol. 15, issue 2, 1-20

Abstract: This study examines the relationship between corporate social responsibility (CSR) and firm performance in the MENA region before and after COVID-19. It also seeks to understand how earnings management moderates that relationship. The final study sample consisted of 661 firm-year observations from 2007 to 2021. This study employed the random effect estimation (RE) method to examine the relationships and used GMM regression for robustness to investigate the results’ consistency. The RE findings demonstrate that environmental, social, and governance (ESG) scores have a favorable impact on return on assets (ROA), even after adjusting for COVID-19. Regarding the moderating effect of EM, the outcome shows that CSR has an insignificant positive impact on financial performance. However, the results demonstrate that ESG has little impact on ROE. Additionally, the findings show a strong positive link between ESG and Tobin’s Q. This study provides policymakers, board directors, and managers with a set of recommendations that are relevant to the context by enabling a better understanding of how managers react to CSR disclosure and the impact of minimizing earnings manipulation on firm performance.

Keywords: corporate social responsibility; firm performance; ESG; earning management; COVID-19; Tobin’s Q; MENA region (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (8)

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