Corporate social responsibility and earnings quality in family firms

Emna Brahem, Florence Depoers () and Faten Lakhal ()
Additional contact information
Florence Depoers: CEROS - Centre d'Etudes et de Recherches sur les Organisations et la Stratégie - UPN - Université Paris Nanterre

Post-Print from HAL

Abstract: Purpose The purpose of this paper is to investigate the relationship between corporate social responsibility and earnings quality, specifically in family firms. Design/methodology/approach Based on a sample of French-listed firms from the period 2005 to 2016, the authors use the instrumental variable approach based on a two-stage least-squares (2SLS) estimator. Findings The results show that Corporate Social Responsibility (CSR) performance is positively associated with the relevance and faithful representation of earnings. This means that companies that commit to CSR activities are more likely to provide high earnings quality. The results also show that the positive association between CSR performance and earnings quality is more prevalent in family firms suggesting that socially responsible family firms are willing to preserve their socio-emotional wealth by disclosing high quality earnings. Research limitations/implications The results suggest that French firms commit to CSR to satisfy the interests of their stakeholders by disclosing high-quality information supporting the conflict resolution view of CSR. The findings also support the socio-emotional wealth perspective and suggest that family firms that engage in CSR activities provide a rich informational environment through high earnings quality. Practical implications This study's findings can be thus useful to investors for their portfolio management decisions by enabling them to identify the profile of companies with high earnings quality. These results may also help standard-setters and capital-market regulators improve market transparency by introducing new requirements to encourage investing in CSR. Originality/value This study extends the research on the relationship between CSR and earnings quality by focusing on two fundamental characteristics including relevance and faithful representation. This paper focuses on the effect of CSR on earnings quality in the specific context of family firms. This study offers then a better understanding of whether socially responsible family firms communicate stronger or weaker earnings quality than non-family firms based on the agency and socio-emotional wealth perspectives.

Date: 2022-03-10
References: Add references at CitEc
Citations:

Published in Journal of applied accounting research, 2022, 23 (5), pp.1114-1134. ⟨10.1108/JAAR-05-2021-0139⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:hal:journl:hal-04127961

DOI: 10.1108/JAAR-05-2021-0139

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().