The impact of earnings opacity on corporate social responsibility: insights from Vietnamese listed firms

Ha Thi Thu Nguyen, Tri Tri Nguyen and Hien Thi Thu Nguyen

Journal of Economics and Development, 2024, vol. 26, issue 4, 290-305

Abstract: Purpose - This paper studies the association between earnings opacity and corporate social responsibility disclosures of firms listed on the Vietnamese Stock Exchange. Design/methodology/approach - We utilize a dataset comprising a sample of all listed Vietnamese firms for the period of 2014–2022. Data regarding corporate social responsibility information are gathered manually. Following Dechowet al. (1995), Kothariet al.(2005) and Bhattacharyaet al. (2003), earnings opacity is measured by using three proxies, including abnormal accruals, earnings smoothing and loss avoidance. Our hypothesis was tested via ordinary least squares (OLS) regressions. To address endogeneity problems, we use the two-stage instrumental variable method (IV-2SLS) as well as the generalized method of moments (GMM) to ensure the robustness of our results. Findings - We find that earnings opacity is positively related to corporate social responsibility disclosures. Cross-sectional analyses indicate that managers of firms disguise their opportunistic behaviour by disclosing more information about corporate social responsibility. The evidence also shows that firms experience long-run underperformance when having higher earnings opacity and greater sustainability disclosures. Our results remain robust even after correcting for endogeneity using the IV approach and the GMM method. Practical implications - Evidence from this study can serve as a warning signal to the investment community, highlighting that some methods aimed at enhancing a firm’s corporate social responsibility disclosures might be used to obstruct other unethical activities. Moreover, the results of this study can help regulators gain a better comprehension of firms' reporting patterns concerning corporate social responsibility initiatives. It should not only reform the corporate social responsibility regulation but also impose stronger litigation for firms to enhance the quality of corporate social responsibility disclosures. Originality/value - We are the first to present evidence regarding the relationship between earnings opacity and corporate social responsibility disclosure in Vietnam.

Keywords: Corporate social responsibility; Earnings opacity; Firm performance; Vietnam (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:jedpps:jed-03-2024-0103

DOI: 10.1108/JED-03-2024-0103

Access Statistics for this article

Journal of Economics and Development is currently edited by Prof Dr Le Quoc Hoi

More articles in Journal of Economics and Development from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().