ASSOCIATION BETWEEN EARNINGS MANAGEMENT AND CORPORATE SOCIAL RESPONSIBILITY: A LITERATURE REVIEW

Abstract

This paper aims to give an overview of the existing
literature on the Earnings Management (EM) and
Corporate Social Responsibility (CSR) relationship in
different countries. This paper reviews preceding studies
concerned about EM, CSR and their relationship. Out of 23
works of literature, 11 studies found a negative
relationship, 6 studies found a positive relationship, 2
studies found blended relationships in case of different
situations and 4 studies found no connection between CSR
and EM. Most of the results demonstrated that probably
the socially responsible organizations have a negative
correlation with EM practice. The types of the relationship
depend on cause-effect relationship, information
asymmetry, how can a company use resources, awareness
on environmental issues, awareness on ethical issues, tax
avoidance tendency, corporate governance practice, nature
of the firm, political environment, opportunistic incentive,
and stakeholder capital, manager's psychology, etc.
Relationships between EM and CSR influence on earnings
quality, firm performance, and firm value.