The moderating role of CSR in the relationship between earnings management and cost of equity: evidence from European ESG data

Yamina Chouaibi, Rim Zouari-Hadiji and Sawssen Khlifi

Asian Review of Accounting, 2023, vol. 32, issue 5, 693-708

Abstract: Purpose - The present work aimed to identify the impact of accrual-based earnings management on the cost of equity (KE) through corporate social responsibility (CSR) as a moderating variable on European Environmental, Social, and Governance (ESG) companies. Design/methodology/approach - The authors used data from a sample of 366 European firms over the 2012–2022 period. The data were collected from the Thomson Reuters Asset 4 and I/B/E/S database and analyzed using STATA 17 as a statistical software package. Findings - As expected, the results showed a negative relationship between accruals, CSR and KE. Moreover, they suggest that the moderating variable negatively affects the relationship between accruals and the KE. Practical implications - The results are pertinent to stakeholders and investors, who would pressure companies to enhance the quality of disclosed information and mitigate risks facing the company. Originality/value - The main contribution lies in examining the relationship between accruals and KE through CSR in the European ESG context.

Keywords: Accruals; CSR; Cost of equity; Moderator (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-08-2023-0209

DOI: 10.1108/ARA-08-2023-0209

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