Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?
Tanggungjawab Sosial Korporat, Pengurusan Pendapat dan Jenis Industri: Adakah CSR Mengukuhkan Strategi Penyingkiran?

Tunku Puteri Intan Safinaz School of Accountancy
Universiti Utara Malaysia
06010 UUM Sintok, Kedah, MALAYSIA.

noratikah@uum.edu.my

Graduate School of Business
Universiti Sains Malaysia
11800 Gelugor, Penang, MALAYSIA.

azlan_amran@usm.my

Graduate School of Business
Universiti Sains Malaysia
11800 Gelugor, Penang, MALAYSIA.

yuvaraj@usm.my

Abstract

Managers could opportunistically misuse corporate social responsibility (CSR) to obfuscate earnings management (EM) by reporting more CSR activities that eventually accomplished stakeholders’ advocacy as their demands on CSR are satisfied. Likewise, sensitive industries have a higher commitment to CSR to appease their stakeholders’ adverse reactions to the nature of their business. This study examines the relationship between EM and sensitive industries on CSR (proxied by the quality of CSR disclosure) and the moderating role of sensitive industries in the relationship between EM and CSR. Employing multiple regression analysis on Malaysian public listed companies for the year 2016, this study finds an insignificant association between EM and CSR, a positive association between sensitive industries companies and CSR and sensitive industries moderate the relationship between EM and CSR. This study offers practical implications for companies to strengthen their corporate governance mechanisms and for investors to cautiously evaluate the companies’ ethics.

Keywords

Corporate social responsibility; earnings management; entrenchment; industry; stakeholder-agency theory
https://doi.org/10.17576/pengurusan-2022-64-08

Citation

Shafai, N. A., Amran, A., & Ganesan, Y. (2022). Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?. Jurnal Pengurusan, 64, 91–104. https://doi.org/10.17576/pengurusan-2022-64-08

@article{shafai2022corporate,
  title={Corporate Social Responsibility, Earnings Management and Industry Type: Does CSR Reinforce Entrenchment Strategy?},
  author={Shafai, Nor Atikah and Amran, Azlan and Ganesan, Yuvaraj},
  journal={Jurnal Pengurusan},
 

volume={64},
  number={},
  pages={91—104},
  year={2022},
  doi={https://doi.org/10.17576/pengurusan-2022-64-08},
  publisher={Penerbit UKM},
}

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Article received: July 29, 2021 
Accepted for publication: April 9, 2022 
Available online: 

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64 (2022) 91 – 104

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