Corporate social responsibility, firm performance and the moderating effect of earnings management in Chinese firms

Sial, M, Chunmei, Z, Khan, T and Nguyen, V 2018, 'Corporate social responsibility, firm performance and the moderating effect of earnings management in Chinese firms', Asia-Pacific Journal of Business Administration, vol. 10, no. 2/3, pp. 184-199.


Document type: Journal Article
Collection: Journal Articles

Title Corporate social responsibility, firm performance and the moderating effect of earnings management in Chinese firms
Author(s) Sial, M
Chunmei, Z
Khan, T
Nguyen, V
Year 2018
Journal name Asia-Pacific Journal of Business Administration
Volume number 10
Issue number 2/3
Start page 184
End page 199
Total pages 16
Publisher Emerald
Abstract Purpose The purpose of this paper is to examine the relationship between corporate social responsibility (CSR) and firm performance and the moderating role of earnings management on the relationship between CSR and firm performance. Design/methodology/approach The empirical study used the updated data set (3,481 unbalanced observations for period 2009-2015) from Chinese listed companies on Shenzhen and Shanghai stock exchanges. The generalized method of moments (GMM) statistical approach has been used for the analysis. The authors utilized STATA to test GMM on a sample of Chinese listed firms data over the period 2009-2015. The unbalanced sample obtained 3,481 observations from China stock market and accounting research database and CSR ratings provided by Rankins (RKS). Findings The results demonstrated that CSR has a positive and significant relationship with firm's performance; also, earnings management has a negatively moderate relationship between CSR and firm performance. These results imply that a high value of earnings management, which results in high level of symbolic CSR, converts to low firm performance of the Chinese firms. CSR actions (only as symbolic measures) promoted by managers as a means to cover their profit management incite an adverse effect on the company's performance. This study has highlighted the impact of two different corporate social responsibilities: substantive and symbolic (genuine CSR vs greenwashing) on firm performance. Research limitations/implications The results of this investigation will be of distinct interest to company owners who wish to ascertain the effectiveness of the sustainability decisions of directors and managers, and also to investors and public authorities to estimate the positive relationship between CSR and company's reputation and image, and thus, the positive influence on firm performance. Originality/value Previous studies have generally focused on the relationship between CSR and firm performance.
Subject Sustainability Accounting and Reporting
Keyword(s) Accrual-based earnings management
Corporate social responsibility
Firm performance
Real earnings management
DOI - identifier 10.1108/APJBA-03-2018-0051
Copyright notice © 2018 Emerald Publishing Limited
ISSN 1757-4323
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