Does Corporate Social Responsibility foster Real Earnings Management? The moderating role of firms’ political connections

Badreddine Hamdi, Inès Kahloul and Tarek Mejri ()
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Badreddine Hamdi: UB - Université de Bourgogne
Inès Kahloul: Institut Supérieur de Gestion Sousse - Institut Supérieur de Gestion Sousse
Tarek Mejri: LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363) - UEVE - Université d'Évry-Val-d'Essonne - Université Paris-Saclay - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris], UEVE - Université d'Évry-Val-d'Essonne

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Abstract: This study aims to examine the effect of Corporate Social Responsibility (CSR) on Real Earnings Management (REM) practices as well as the role of political connections as moderating variable. To enhance the reliability of this study, we employ different proxies for REM to investigate the relationship between CSR and REM. Our study is motivated by conflicting evidence in the extant literature about the role of CSR in reducing earnings management. Using a panel data set consisting of a sample of French companies listed on the CAC All Tradable index, during the period 2010–2019, we document that CSR influences negatively the different measures of REM whereas a positive effect is observed with political connection. We also find that CSR reporting influences REM through the positive moderating role of political connection, only with the individual measure of REM. Thus, the results show that political connections partially moderate the relationship between CSR practices and REM.

Date: 2023-06-08
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Published in CIG 2023 : 22ème Conférence Internationale de Gouvernance, Association Académique Internationale de Gouvernance (AAIG), Jun 2023, Nancy, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04281403

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