Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries
Research aims: This study aims to present empirical evidence on the effect of social responsibility disclosure on real earnings management and the role of assurance in this relationship. This is based on a paradox, i.e., companies that publish standardized corporate social responsibility disclosures...
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| Format: | Article |
| Language: | English |
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Universitas Muhammadiyah Yogyakarta
2024-01-01
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| Series: | Journal of Accounting and Investment |
| Subjects: | |
| Online Access: | https://journal.umy.ac.id/index.php/ai/article/view/20292 |
| _version_ | 1797232783463022592 |
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| author | Eko Budi Santoso Basuki Basuki Isnalita Isnalita |
| author_facet | Eko Budi Santoso Basuki Basuki Isnalita Isnalita |
| author_sort | Eko Budi Santoso |
| collection | DOAJ |
| description | Research aims: This study aims to present empirical evidence on the effect of social responsibility disclosure on real earnings management and the role of assurance in this relationship. This is based on a paradox, i.e., companies that publish standardized corporate social responsibility disclosures to project ethical business practices are also associated with accounting and financial scandals.
Design/Methodology/Approach: This study was conducted on non-financial sector companies in developing countries that are members of ASEAN-4, namely Indonesia, Malaysia, Thailand, and the Philippines, which issued GRI-based social responsibility disclosures in the period 2013-2019, amounting to 285 companies with a total of 859 observations.
Research findings: The results demonstrated that companies with standardized social responsibility disclosures tend to reduce their real earnings management practices. However, the assurance variable mitigates the negative effect of corporate social responsibility on real earnings management, implying that assurance provides false credibility. In an additional analysis, the samples were grouped based on board structure. The findings of this study are consistent with two-tier board structures, suggesting that a one-tier system provides better information quality.
Theoretical contribution/Originality: The originality of this study lies in a comprehensive measurement of social responsibility disclosure variables using an index that gauges a combination of accountability and performance aspects. Furthermore, this study takes into account assurance as a variable representing the credibility of information, which surprisingly moderates the negative effect of social responsibility disclosure on real earnings management.
Practitioner/Policy implication: The findings of this study underscore the importance of standardized social responsibility disclosure in mitigating managerial opportunistic behavior. The findings also highlight the need to enhance the assurance function to prevent its use as an opportunistic management tactic. |
| first_indexed | 2024-04-24T16:05:46Z |
| format | Article |
| id | doaj.art-f03f85c1da81474bb53b5f9d500dd882 |
| institution | Directory Open Access Journal |
| issn | 2622-3899 2622-6413 |
| language | English |
| last_indexed | 2024-04-24T16:05:46Z |
| publishDate | 2024-01-01 |
| publisher | Universitas Muhammadiyah Yogyakarta |
| record_format | Article |
| series | Journal of Accounting and Investment |
| spelling | doaj.art-f03f85c1da81474bb53b5f9d500dd8822024-04-01T05:55:16ZengUniversitas Muhammadiyah YogyakartaJournal of Accounting and Investment2622-38992622-64132024-01-01251487410.18196/jai.v25i1.202927228Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countriesEko Budi Santoso0Basuki Basuki1Isnalita Isnalita2Department of Accounting, School of Business Management, Universitas Ciputra, West JavaDepartment of Accounting, Faculty of Economics and Business, Universitas Airlangga, West JavaDepartment of Accounting, Faculty of Economics and Business, Universitas Airlangga, West JavaResearch aims: This study aims to present empirical evidence on the effect of social responsibility disclosure on real earnings management and the role of assurance in this relationship. This is based on a paradox, i.e., companies that publish standardized corporate social responsibility disclosures to project ethical business practices are also associated with accounting and financial scandals. Design/Methodology/Approach: This study was conducted on non-financial sector companies in developing countries that are members of ASEAN-4, namely Indonesia, Malaysia, Thailand, and the Philippines, which issued GRI-based social responsibility disclosures in the period 2013-2019, amounting to 285 companies with a total of 859 observations. Research findings: The results demonstrated that companies with standardized social responsibility disclosures tend to reduce their real earnings management practices. However, the assurance variable mitigates the negative effect of corporate social responsibility on real earnings management, implying that assurance provides false credibility. In an additional analysis, the samples were grouped based on board structure. The findings of this study are consistent with two-tier board structures, suggesting that a one-tier system provides better information quality. Theoretical contribution/Originality: The originality of this study lies in a comprehensive measurement of social responsibility disclosure variables using an index that gauges a combination of accountability and performance aspects. Furthermore, this study takes into account assurance as a variable representing the credibility of information, which surprisingly moderates the negative effect of social responsibility disclosure on real earnings management. Practitioner/Policy implication: The findings of this study underscore the importance of standardized social responsibility disclosure in mitigating managerial opportunistic behavior. The findings also highlight the need to enhance the assurance function to prevent its use as an opportunistic management tactic.https://journal.umy.ac.id/index.php/ai/article/view/20292corporate social responsibility disclosurereal earnings managementassurance |
| spellingShingle | Eko Budi Santoso Basuki Basuki Isnalita Isnalita Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries Journal of Accounting and Investment corporate social responsibility disclosure real earnings management assurance |
| title | Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries |
| title_full | Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries |
| title_fullStr | Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries |
| title_full_unstemmed | Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries |
| title_short | Standardized corporate social responsibility disclosure, assurance, and real earnings management: evidence from developing countries |
| title_sort | standardized corporate social responsibility disclosure assurance and real earnings management evidence from developing countries |
| topic | corporate social responsibility disclosure real earnings management assurance |
| url | https://journal.umy.ac.id/index.php/ai/article/view/20292 |
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