Asia-Pacific Journal of Business Administration

Corporate social responsibility, firm performance and the moderating effect of

earnings management in Chinese firms
Muhammad Safdar Sial, Zheng Chunmei, Tehmina Khan, Vinh Khuong Nguyen,
Article information:
To cite this document:
Muhammad Safdar Sial, Zheng Chunmei, Tehmina Khan, Vinh Khuong Nguyen, (2018) "Corporate
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

social responsibility, firm performance and the moderating effect of earnings management in Chinese
firms", Asia-Pacific Journal of Business Administration, https://doi.org/10.1108/APJBA-03-2018-0051
Permanent link to this document:
https://doi.org/10.1108/APJBA-03-2018-0051
Downloaded on: 30 October 2018, At: 21:41 (PT)
References: this document contains references to 91 other documents.
To copy this document: permissions@emeraldinsight.com
Access to this document was granted through an Emerald subscription provided by emerald-
srm:320271 []
For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald
for Authors service information about how to choose which publication to write for and submission
guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information.
About Emerald www.emeraldinsight.com
Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as
well as providing an extensive range of online products and additional customer resources and
services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the
Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for
digital archive preservation.

*Related content and download information correct at time of download.

 The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1757-4323.htm

Corporate
Corporate social responsibility, social
firm performance and the responsibility

moderating effect of earnings

management in Chinese firms
Muhammad Safdar Sial and Zheng Chunmei Received 20 March 2018
Revised 20 June 2018
Wuhan University, Wuhan, China Accepted 26 September 2018
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

Tehmina Khan
School of Accounting, RMIT University, Melbourne, Australia, and
Vinh Khuong Nguyen
Faculty of Sociology, Vietnam National University, Hanoi, Vietnam

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. This study provides the impact of earnings management (measurement of both aspects of
accrual-based earnings management and real earnings management) on this relationship. Furthermore, this
study examines the state of CSR in the Chinese market and provides empirical evidence of this relationship in
emerging markets.
Keywords Accrual-based earnings management, Corporate social responsibility, Firm performance,
Real earnings management
Paper type Research paper

1. Introduction
China is the second biggest world economy with very large-scale commercial operations in
China and in other world regions. Business/commercial activities continue to have critical and
significant environmental and social impacts in China. As a result, the concept of corporate
social responsibility (CSR) which addresses environmental, social and economic impacts has
been receiving increasing attention in the last decade in China. There have been numerous Asia-Pacific Journal of Business
Administration
high-profile business cases highlighting the consequences of poor CSR performance in China © Emerald Publishing Limited
1757-4323
and there is an increasing societal demand for better CSR performance by Chinese companies. DOI 10.1108/APJBA-03-2018-0051
 APJBA The perception of CSR tends to be different in numerous countries, depending on how CSR
is seen in a given social, political, financial and institutional system. The perception and
practice of CSR also depends on organizational culture and institutional arrangements
(Matten and Moon, 2008). Economic conditions broadly and the level of competition which
firms confront, as well as pressure from the regulators and non-government associations such
as civil society play noteworthy roles in influencing CSR practices. In numerous developing
nations, the State is likely to present the guidelines of CSR to empower firms to undertake
active participation in improving the quality of life in society (Campbell, 2007). In China, firms
have a unique emphasis when reporting their CSR activities. Firms worldwide level tend to
comply with international CSR standards and guidelines, Chinese firms rely on government
guidelines to undertake CSR; yet, CSR is still in infancy in China (Noronha et al., 2013).
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

CSR is an alternative management model, also for Chinese companies. It describes the
company as a network of relationships, separating owners and managers, and with
stakeholder or other groups (such as employees, clients, suppliers) engaged in the
development of the entity (Adams, 2002). Globally, firms are progressively mindful of the
benefits of socially responsible behavior. This factor has a major impact on the CSR
behaviors of Chinese firms as these corporations have dramatic local and global influence.
There are other factors including internal factors such as firm performance and earnings
management which also have a significant impact on firms’ CSR performance.
The primary purpose of our study is to investigate the relationship between CSR and
firm performance and moderating role of earnings management on the CSR–financial
performance (FP) relationship. According to Waddock and Graves (1997), Tang et al. (2012),
Orlitzky et al. (2003), better-performing companies make the investment in CSR activities
and these practices build the reputation of responsible firms. On the contrary, businesses
may suggest better CSR performance without the actual undertaking of impacting CSR
activities, referred to as symbolic CSR. Regarding the moderating role of earnings
management, we present the thought that symbolic CSR can be boosted as a result of
managers’ manipulative accounting behavior (Surroca and Tribó, 2008).
One of the most essential and fundamental information disclosed by financial reporting
is the earnings of the firm as it determines the future of the firm. If the management of firm
incorporates its discretion and judgment in deciding the profits of the firm it may cause
manipulation or management in the earnings, termed as earnings management. Earnings
management strongly affects the quality of earnings (Lo, 2008). Earnings management has
lasting implications for the value of the firm. Due to its fundamental role in the
determination of firm earnings and future value it has been widely studied in the corporate
finance literature.
Earnings management is classified as either accrual or real depending on the nature of
manipulation. Accrual manipulation includes shifting the timing of expense and revenue
recognition between periods like meeting earning thresholds by delaying expense
recognition and advancing revenue recognition. Similarly, real activities can be manipulated
by decreasing the discretionary expenses like advertising and maintenance expenditure or
by postponing or decreasing research and development expenditure.
Firms that manipulate earnings do so to disclose financial reporting that does not match
with actual performance (García Osma et al., 2005; Price and Sun, 2017). The outcomes of
earnings management methods are certainty deleterious; they decrease corporate value, its
reputation and its corporate image (Fombrun et al., 2000; Roychowdhury, 2006). On the
other hand, it incites the misfortune of stockholders, investors and other partners and
causes an increase in activism and observation by interested groups and regulatory
authorities (Price and Sun, 2017; Zahra et al., 2005).
There are numerous prior studies which have examined the correlation between CSR and
firm performance. However, there are additional factors which need detailed analysis.
 Research undertaken on the association between CSR and firm performance has been Corporate
inconsistent. Previous investigations have confirmed a positive relationship between CSR and social
firm performance (Cheng et al., 2016; Zhu et al., 2014). In contrast, Marcus (1989) and Wright responsibility
and Ferris (1997) have shown a negative relationship. Also, several other studies have shown
no correlation between CSR and firm performance (Aupperle et al., 1985; Teoh et al., 1999).
With non-symbolic CSR practice, managers must balance the interests of shareholders,
other stakeholders and environmental and social issues (Margolis and Walsh, 2003). Thus,
there may be a struggle between these goals. Also, few studies have examined the influence of
moderating variables on the relationship between CSR and firm performance (Zhu et al., 2014).
Therefore, investigating the relationship between earnings management measurement and
CSR has a key role in the field of accounting research (Healy and Wahlen, 1999). Typically,
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

studies that investigate earnings management use discretionary accruals as its proxy which is
measured as the residual or prediction error from an accrual – expectation mode (Healy and
Wahlen, 1999). Earnings management by accrual manipulation is relatively easy to detect and
measure as compared to real activities manipulation which is known as real earnings
management which is quite hard to detect even by auditors and other analysts of firm’s
financial reports. Managers are moving to real activities manipulation rather than accrual
earnings management. However, there is a scarcity of evidence on the use of real earnings
management particularly in emerging economies like in China; this field of research is quite
recent compared to accrual management. We have used both accrual and real earnings
management in our study.
Our study is based on a sample of 3,481 observations for the period 2009–2015 from
Chinese listed companies on Shenzhen and Shanghai stock exchanges. The results of our
study show that even though CSR has a positive relationship with firm performance, the
improved CSR may only be symbolic, to cover profit management which might have an
adverse effect on actual CSR and firm performance.
Our paper contributes to the contemporary literature on CSR through these aspects.
First, the paper makes a significant contribution by providing further understanding of the
relationship between CSR and firm performance in emerging markets. This is achieved by
assessing the correlation between CSR and FP with the moderating effect of earnings
management of Chinese firms, employing a unique setting and updated data set. There is a
huge volume of research investigating the impact of CSR (genuine and symbolic) on firm
performance using primary data, papers utilizing secondary Chinese companies’ data set is
still limited. In light of emerging market perspectives, a study investigating the relationship
in the Chinese context is important. Second, since endogeneity is a serious issue, we have
utilized the generalized method of moments (GMM) estimator to address the potential
endogeneity problem and to undertake robust checking in our analysis.
Our study is organized as follows: Section 2 represents the research hypothesis, Section 3
describes the methodology, Section 4 provides the results and discussion of results and
Section 5 presents the conclusion and recommendations.

2. Research hypothesis
2.1 CSR and firm performance
CSR has received attention over the last three decades from academics and businesses
(Margolis et al., 2007, 2009; Nakao et al., 2007; Orlitzky et al., 2003). According to McWilliams
and Siegel (2001), CSR is focused on throughout a cost-benefit analysis perspective. The aim
is to avoid incurring extra costs that consequently do not create profit, and that would have
a negative influence on the performance of the firm. Particularly, the purpose of CSR, from a
managerial perspective, is to reduce the agency problem. CSR is used as a means of
accommodating a company’s intentions with social and ethical ends and for avoiding
conflict of interest among managers, stockholders and other stakeholders.
 APJBA Prior research exists on the relationship between CSR and firm performance with mixed
results. Di Giuli and Kostovetsky (2014) have shown a negative correlation between CSR
and firm performance, while most of the past (Orlitzky et al., 2003; Price and Sun, 2017;
Van Beurden and Gössling, 2008; Margolis et al., 2009) studies have shown a positive
relationship between CSR and firm performance.
Currently, numerous studies have investigated the relationship between CSR and firm
performance. Some studies have concluded that with the implementation of CSR, firm
effectiveness is improved (Healy and Wahlen, 1999); environmental, social and transaction
costs are reduced; better market coverage and improved public image are attained
(McWilliams and Siegel, 2001; Turban and Greening, 1997), sustainability and firm
performance increase (Chen and Wang, 2011). The results of these studies show that CSR leads
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

to increased firm performance (Li et al., 2013; Lin et al., 2009; Van der Laan Smith et al., 2005).
According to Mi and Wang (2000), state-owned enterprises have a serious issue in China
as the managers appointed by the government only serve for the benefit of State and they do
not have motivation to seek maximum benefits for different stockholders. Van Beurden and
Gössling (2008) study has shown a positive relationship between CSR and firm performance.
Zu and Song (2009) investigated the expectations of managers about CSR by using survey
method. In the Chinese context, there are very few papers that have studied a direct
relationship between CSR and firm performance. Due to strong government control over
Chinese firms different findings have occurred as compared to developed countries.
According to Withisuphakorn and Jiraporn (2016), older companies with stable
performance more aggressively participate in CSR activities with a focus on environmental
performance. On the contrary, Gregory et al. argue that corporate social performance has an
adverse effect on the profit of the transportation industry. Waddock and Graves (1997) used
slack resources theory to explain the connection between CSR and FP. According to Cyert
and March (1963), extra resources are needed for company’s operations over an extended
period. When companies have surplus financial resources they undertake CSR projects that
endeavor to enhance the company’s image as well as for seeking long-term investment
opportunities. This helps improve business results in the future for the firm (Waddock and
Graves, 1997; McGuire et al., 1988).
According to Dingwerth and Eichinger (2010), most firms extend CSR reporting societal
expectations. According to Lynch (2010), CSR reporting is valuable for external and internal
stakeholders. According to Solomon and Lewis (2002), strategic stakeholder management
paradigm has become a very influential tool and how firms associate with clients, workers,
stockholders and other partners are exceptionally vital highlights of CSR. Socially
responsible firms increase the reputation and develop excellent relationship with clients,
workers, stockholders and other people, which directly enhance FP (Chen and Wang, 2011;
Turban and Greening, 1997; Davis, 1973). Based on prior literature, we propose the
following hypothesis:
H1. Ceteris paribus, a positive relationship exists between CSR and firm performance.

2.2 Moderating role of earnings management

There is an extensive assortment of earnings management in the economic results of
companies both in developed and emerging nations depending on the nature of intention for
earning manipulation. For example, there may be capital market implications such as
influencing stock price, seasoned equity offering, initial public offering, stock-based
acquisitions (Cohen and Zarowin, 2010; Kim et al., 2012); contract-based incentive like avoiding
the breach of debt covenant, declining the cost of obligation (Lambert, 2001) and opportunistic
motives for self-serving like expanding reward pay, promotion and other perquisites and
stock options (Burgstahler and Dichev, 1997; Degeorge et al., 1999; Zhao et al., 2012).
 Therefore, the scope of earnings management is broad and sometimes due to its extensive Corporate
shares in firm economic operations it is considered as inevitable for firm endurance. social
It has also been observed that recently managers have tended to move toward real responsibility
activities manipulation as the possibility of detection of this earnings management is
shallow as compared to accrual manipulation (Roychowdhury, 2006) which is easily
detected by a market participant and corporate governance mechanisms. Though this type
of earnings management is also detrimental for the firm in the long run, in the short term,
this may be beneficial as it tends to increase cash flow from operations and enables the firm
to satisfy short-term motives at the cost of long-term value.
The growing practices of CSR have created an attitude of skepticism among many
stakeholders due to the CSR disclosures which do not reflect actual sustainability performance
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

by the business, referred to as symbolic CSR or greenwashing. Some researchers have been
pointing that CSR practices are a discretionary organizational exercise aimed at increasing
profit (Barnett, 2007). According to Handelman and Arnold (1999), managers can improve
CSR practices as a means of self-promotion, directed at enhancing financial position.
Therefore, managers will behave discretionarily to accomplish their benefit, for example, to
increase their compensations. Conversely, according to Johnson et al. (2012), “the ends justify
the means,” i.e., in some circumstances, actual positive CSR performance may be achieved, and
it may not necessarily just be greenwashing. Different kinds of voluntary disclosures may be
used to give the impression of a transparent company to divert attention from unethical
accounting practices such as earnings management (Gavana et al., 2017).
Cespa and Cestone (2007) demonstrated that when management behaves discretionarily
from the perspective of earnings manipulation, then managers implement the CSR activities
as a protective way to evade detrimental reactions by the stakeholders. Research by Prior
et al. (2008) has shown that managers who perform earnings management (either inflating or
reducing numbers depending on the company’s position and depending on the advantages
to be achieved) try to compensate third parties with social, ethical or environmental
activities to conceal their inappropriate conduct.
We argue that managers use earnings management behavior as a tool to promote CSR
activities to avoid the control of stakeholders in the corporate governance process. This will
result in a negative impact on firm performance. Nevertheless, these manipulative actions
have a harmful influence on corporate performance as the only objective of earnings
management, and symbolic CSR is the managerial remnant, and CSR, in this case, reinforces
the negative aspects of entrenchment (Surroca and Tribó, 2009). Also, earnings management
activities will negatively impact the relationship between CSR and firm performance
(Bebchuk and Weisbach, 2010). Earnings management practices based on the flexibility of
accounting standards to promote CSR and firm performance are undertaken at the
preference of the manager (Prior et al., 2008; Dianita, 2011).
We have proposed the following hypothesis in relation to the moderating influence of
earnings management practices on the relationship between CSR and firm performance:
H2. Earnings management negatively moderates the relationship between CSR and
firm performance.

3. Research methodology
3.1 Population and sample
The sample comprises of Chinese listed firms on Shenzhen and Shanghai stock exchanges
from the year 2009–2015. There are 3,481 unbalanced observations. Data were gathered
from China stock market and accounting research database and CSR ratings provided by
Rankins (RKS), which is an independent third-party firm, to measure the CSR of listed firms
in China. All data have been winsorized by replacing two extreme values from both sides.
 APJBA 3.2 Measurement of firm performance
By following previous study (Hillman and Keim, 2001), we have measured firm performance
by using the proxy (Tobin Q), calculated by using Tobin’s Q formula (Total assets market
capitalization−book value of equity−deferred tax liability)/total assets.

3.3 Measurement of CSR

The dependent variable used in this study was the scoring and ranking of CSR provided by RKS
that we considered. RKS has developed an MCTi social responsibility report appraisal system
that uses a structured expert scoring method to evaluate and score a firm’s CSR. The RKS data
set was used in prior CSR studies in China (Lau et al., 2016; Marquis and Qian, 2013; Liao et al.,
2016) with acceptable results. It is assumed that an increase in CSR ratings close to earnings
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

management period is a representation of greenwashing or symbolic legitimacy (Kim et al., 2012).

3.4 Measurement of earnings management

Earnings management measures have been divided into two main branches: accrual-based
earnings management and real-based earnings management. The modified Jones model by
Dechow et al. (1996) is used as a proxy of accrual-based earnings management (Becker et al.,
1998; Davidson et al., 2005; DeFond and Jiambalvo, 1994). Modified Jones model has been
provided by Dechow et al. (1995) who argues that, if managers decide to accrue the firm’s
revenues at the year’s end where the cash has yet to be received, then the extended amount
will be reflected in revenues that year and account receivables would increase. So, Jones
(1991) model was modified for managerial discretion description in revenues. Changes in
receivables (ΔREC) were deducted from the changes in revenues (Sales).
The discretionary portion of accruals is accruals-based earnings management. Accounting
accruals are divided into discretionary and nondiscretionary. Nondiscretionary is normal while
discretionary accruals are abnormal accruals. Those accruals which result from normal business
operations or previous accounting transaction are termed as nondiscretionary accruals.
Modified Jones model:
TAit 1 ðDRevit þDRCV it Þ PPE it
¼ b0 þb1 þb2 þb3 þ A it ; (1)
ASSETS it
1 ASSETS it
1 ASSETS it
1 ASSETS it
1
where TAit is the total accruals; ASSETSit−1 the previous year total assets; β0, β1, β2, β3 are
the coefficients; ΔRevit the difference between current year revenue and previous year;
ΔRCVit the difference between current year receivable and previous year receivable; PPEit
property, plant and equipment; and εit the error term in year t for firm i.
Real-based earnings management is used as an alternative to accrual-based earnings
management via Roychowdhury’s (2006) and Cohen and Zarowin’s (2010) models.
The first model used to compute the real earnings management by manipulation of
revenue is as follows:
CFOit 1 REV it DREV it
¼ b0 þb1 þb2 þb3 þ A it : (2)
ASSETS it
1 ASSETS it
1 ASSETS it
1 ASSETS it
1
The second model used to compute the real earnings management by manipulation of
over-production is as follows:

PRODit 1 REV it DREV it

¼ b0 þb1 þb2 þ b3
ASSETS it
1 ASSETS it
1 ASSETS it
1 ASSTS it
1
DREV it
1
þb4 þ A it : (3)
ASSETS it
1
 The third model used to compute the real earnings management by manipulation of Corporate
discretionary expenses is as follows: social
Disc_Expit 1 Salesit
1 responsibility
¼ b0 þb1 þb2 þ A it : (4)
ASSETS it
1 ASSETS it
1 ASSETS it
1
We have computed aggregate real earnings management this way following prior studies
(Chi et al., 2011; Kim et al., 2012):
REM ¼ ACFO–APC þADE; (5)
where REM represents real earnings management; ACFO represents abnormal cash flow
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

from operations; APC represents abnormal production cost; and ADE represents abnormal
discretionary expenses.

3.5 Control variables

By following previous studies (Bozzolan et al., 2015; Cho and Chun, 2016; Liu et al., 2017;
Martínez-Ferrero et al., 2016), we have also included some control variables ( firm size, firm
age, board member meeting frequency, board member average age, board size, firm leverage
and Big4) concerning their influence on firm performance.

3.6 Methods
To examine the proposed hypotheses, we assessed GMM equations for panel data. We
applied Arellano and Bond’s (1991) technique as current estimator has improved results as it
considers time-series dimension of data. Specifically, the GMM estimator permits controlling
endogeneity between variables and unobservable heterogeneity, which varies depending on
each company but is invariant over time. The dynamic panel method is well recognized
because fixed effects model is incompatible when the period is small (Nickell, 1981) and the
ordinary least squares estimator based on first differences. In these situations, GMM by
Arellano and Bond (1991) is broadly used, and GMM method will help persistent feature of
the results, which overcomes the shortcomings of previous studies (Cheng et al., 2016; Zhu
et al., 2014):
FP it ¼ b0 þb1 CSRit þb2 FS it þb3 FAit þb4 BMM F it þb5 BMAAit þb6 BS it
þb7 LEV it þb8 Big4it þeit ; (6)

FP it ¼ b0 þb1 CSRit þb2 AEM it þb3 CSR

 AEM it þb4 FS it þb5 FAit þb6 BM M F it þb7 BMAAit

þb8 BS it þb9 LEV it þb10 Big4it þeit : (7)

In Equation (6), FP it is the dependent variable which is measured by TQ and CSRit is
lagged by two years to avoid simultaneity. In Equation (7), CSR  AEM it is the interaction
variable lagged by two years and is used to avoid the endogeneity with FP. For detail
description of variables see Table I.

4. Findings
4.1 Summary of descriptive statistics
Table II represents the descriptive statistics. The mean value of Tobin Q is 1.672377, and its
standard deviation is 1.539503. The mean value of the CSR variable is 38.34504, which is very
low, it means CSR practices are in infancy in China. The standard deviation of CSR is 13.13.
 APJBA Variable Abbreviation Measurement

Firm performance FP Calculated by Tobin Q formula (Total assets market

Corporate social CSR
responsibility
Accrual earning management AEM
Real earning management
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)
capitalization−book value of equity−deferred tax liability)/
total assets
Measured as the RKS CSR score for the firm
Accrual earning management measured by modified
Jones model
REM Real earning management measured by Roychowdhury
(2006) model
FS The firm’s size calculated as the natural log of total assets at

the end of the fiscal year

Firm age FA Firm listing age
Board member meeting BMMF Calculated by total number of board meeting in one year
frequency
Board member average age BMAA Calculated by average age of board members in the company
Board size BS Calculated as total number of directors in the board
Leverage LEV The firm’s leverage measured as the total debt divided by total
Table I. assets at the end of the fiscal year
Variables and Big4 Big4 The Big4 is dummy variable. If firm audited their reports from
measurement Big4 audit firm then equal to 1 , otherwise 0

Variable Obs Mean SD Min. Max.

TQ 3,481 1.672377 1.539503 0.045632 20.94993

CSR 3,481 38.34504 13.12537 11.69 89.2979
AEM 3,481 0.1133083 0.118037 0.0001429 4.142882
REM 3,481 0.0797379 0.3979883 −5.157714 2.160463
FS 3,481 23.24123 1.769095 19.54107 30.73155
FA 3,481 12.2324 5.372851 1 27
BMMF 3,481 10.01178 4.544623 0 15
BMAA 3,481 51.53015 3.754672 29 82
BS 3,481 9.599828 2.342852 4 18
LEV 3,481 0.5209174 0.2140473 0.007969 1.344746
Table II. Big4 3,481 0.1812698 0.3852969 0 1
Descriptive statistics Note: For description of variables see Table I

The mean value of accrual earnings management is 0.11 with a standard deviation of 0.11.
However, the mean value of real earnings management is 0.079 with a deviation of 0.39.
Regarding control variables, the mean value of firm size is 23.24, and, on average, nine
board members exist in Chinese companies. Furthermore, on average, 18 percent of
Chinese’s companies audit their financial statements from Big4 auditors. The average
mean of firm age, board member meeting frequency and leverage are 12.23, 10.0,
and 0.52, respectively.

4.2 Pairwise correlation matrix

Table III shows the Pearson correlation coefficients between all variables and coefficients
between all variables are less than the acceptable limit, there is no substantial issue
of multicollinearity.
 Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

1 2 3 4 5 6 7 8 9 10

1. CSR 1
2. AEM 0.0249 1
3. FS 0.5715*** 0.0692*** 1
4. FA −0.0120 −0.0352** 0.1142*** 1
5. BMMF 0.0926*** −0.0270 0.1643*** 0.0577*** 1
6. BMAA 0.1193*** −0.0416** 0.1719*** 0.1582 −0.0359* 1
7. BS 0.3069*** 0.0288* 0.4496 0.0228*** 0.0188 0.0562*** 1
8. LEV 0.2365*** 0.0931*** 0.5984*** 0.2154*** 0.1975*** 0.0397 0.2612** 1
9. Big4 0.4269*** 0.0434** 0.5600 0.0005 0.0577*** 0.0699*** 0.2625** 0.2321* 1
10. TQ −0.1659*** −0.0004 −0.4625*** −0.1481*** −0.0864*** −0.1104*** −0.2174*** −0.530** −0.18** 1
Notes: For description of variables see Table I. *,**,***Significant at 10, 5 and 1 percent level, respectively
responsibility
Corporate
social

matrix
Table III.
Pairwise correlation
 APJBA 4.3 Results and discussion
Table IV presents the results. The primary objective of our study has been to determine the
relationship between CSR and firm performance and the moderating effect of earnings
management on CSR and firm performance relationship. The findings of the first model
demonstrate that CSR has a positive relation with firm performance (coef. 0.00635 and
p-value ¼ 0.035), results are significant at the 5 percent level. Our first hypothesis H1 is
accepted. The findings are in line with previous studies Muñoz et al. (2015), Ciciretti et al.
(2014), Rajput et al. (2012), Chen and Wang (2011), Inoue and Lee (2011) and Veronica Siregar
and Bachtiar (2010) which have determined that greater CSR activities lead to increased
firm performance.
With the second model, we employed Dechow et al.’s (1996) model based on discretionary
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

accruals. The effect of interaction variable (CSR × AEM) is negative on firm performance
(coef. −0.00631, p-value ¼ 0.050) and significant at 5 percent level. Our second hypothesis
H2 is accepted which means that earnings management moderates the relationship between
CSR and FP (Sundaramurthy, 2000), argues that when firms carry out the practice of
earnings management, then firm performance decreases. Our result is also supported by
Surroca and Tribó (2008), who demonstrated that directors cooperate with stakeholders
with the aim of encouraging their strategy and of advancing CSR for their own
benefit – resulting in symbolic CSR. These results are also consistent with Prior et al. (2008),
who showed that a higher level of earnings management matches with a significant
negative effect of CSR on the future firm FP.
Regarding the control variables, board member meetings frequency was found to be
significantly positively correlated with firm performance in both models and this finding is
consistent with previous research. Ma and Tian (2014) argue that frequency of board
meetings is positively related with firm performance. The firm age and status of audit firm
that is it being a Big4 are significantly positively correlated in all the models, and the
coefficient of leverage is statistically negative in all models at 1 percent level. The results are
consistent with prior studies (Phillips and Sipahioglu, 2004; Fama and French, 1998; Negash,
2001). The coefficient of board size is negative and significant at 10 percent level. The result
is in line with prior studies by Liang et al. (2013). The authors found a negative relationship
between board size and firm performance. The negative relationship between board size and
firm performance is also supported by Doğan and Yildiz (2013).
This study reinforces the concepts of stakeholder theory. According to this theory, when
managers are required to maximize benefits of shareholders and they need to guarantee

Dependent variable : firm performance measured Tobin Q

Model 1 Model 2
Variable Coef. p-value Coef. p-value

CSR 0.00635** 0.035 0.00252* 0.067

EM – – −0.05204 0.874
CSR×EM – – −0.00631** 0.050
FS 0.15837 0.380 0.17648 0.319
FA 0.08017*** 0.000 0.08213*** 0.000
BMMF 0.01067** 0.041 0.01085** 0.036
Table IV. BMAA −0.09199** 0.017 −0.08409** 0.032
The influence of CSR BS −0.02454* 0.062 −0.02329* 0.081
on FP and moderating
LEV −1.9470*** 0.000 −1.9891** 0.000
role of earning
management on the Big4 0.45762*** 0.002 0.46016** 0.002
relation of Wald χ 2
73.21 87.21
CSR and FP Notes: *,**,***Significant at 10, 5 and 1 percent level, respectively
 financial benefits, the behavior of earnings management is initiated. Furthermore, Corporate
maximizing shareholder advantage may be hazardous to the interests of other stakeholders social
such as customers and suppliers (Foster and Jonker, 2005; Wong et al., 2011) resulting in responsibility
symbolic CSR to demonstrate a balanced stakeholder approach (Phillips et al., 2003).
The board of directors is required to consider all stakeholder requirements. They, thus,
support management in undertaking symbolic CSR and earnings management to satisfy
all stakeholders.

4.4 Robustness checks

Table V represents the alternative measures of accrual earnings management. In the first
model as in Table V, we have used real earnings management as proposed by Zang (2011).
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

The findings confirm the adverse effect of interaction variable (CSR × REM) on firm
performance (coef. −0.00820, p-value ¼ 0.026) and is found to be significant at 95 percent
level of confidence. These results are consistent with our main results previously
demonstrated in Table IV.

5. Conclusion
There is currently debate about the relationship between CSR and firm performance, also
from the perspective of Chinese companies. Business intentions of undertaking real CSR
or symbolic CSR have also been questioned. Some earlier studies have cleared the
intention of implementation of CSR as an entrenchment mechanism manipulated by
managers, who employ their discretionary controls as a way of controlling activism
by their stakeholders (thus symbolic CSR). The moderating role of earnings management
in the relationship between CSR and firm performance has been investigated since
managers might commit to CSR (symbolically) to avoid the negative impact of earnings
management on firm performance.
Our findings have confirmed a relationship between CSR and firm performance and the
moderating role of earnings management on CSR (changing it to symbolic CSR and
manipulated demonstration of firm performance). Symbolic CSR is exercised by managers
to cover their profit manipulation. Despite the positive relationship between CSR activities
(real CSR) and firms’ performance, lower firm performance results due to earnings
management practices and the exercising of symbolic CSR.
This research has considered the relationship between FP, earnings management and CSR
in the context of China. Previous studies have focused on the developed country context.

Dependent variable: firm performance measured Tobin Q

Model 1
Variable Coef. p-value

CSR 0.00571** 0.056

REM −0.3393** 0.010
CSR × REM −0.00820** 0.026
FS 0.17857 0.320
FA 0.07999*** 0.000
BMMF 0.01102** 0.035
BMAA −0.09203** 0.016
Table V.
BS −0.02294* 0.081
Robust analysis, the
LEV −1.9217*** 0.000 moderating role of
Big4 0.49160** 0.001 earning management
Wald χ2 78.13 on the relation of CSR
Notes: *,**,***Significant at 10, 5 and 1 percent level, respectively and FP
 APJBA China has a distinct CSR legal system compared to other markets. The Chinese Government
has initiated CSR business practices and although regulation is in place for the undertaking of
CSR business activities, CSR practice and reporting is still in infancy in China. Investigations
of the relationship between CSR and FP in the Chinese market are relatively new (Cheng et al.,
2016; Zhu et al., 2014; Zhang and Wen, 2008) and this paper has provided a critical
contribution in this space.
In this study, a quantitative analysis of the factors which impact CSR and the impact
of earnings management on the undertaking of symbolic CSR and the negative impact of
earnings management on the FP of Chinese firms have been considered. In light of this
study, further analysis including qualitative analysis of the motivations behind symbolic
CSR can be undertaken in the context of China and in other countries. The impacts of
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

symbolic CSR can be investigated further.

References
Adams, C.A. (2002), “Internal organisational factors influencing corporate social and ethical reporting:
beyond current theorising”, Accounting, Auditing & Accountability Journal, Vol. 15 No. 2,
pp. 223-250.
Arellano, M. and Bond, S. (1991), “Some tests of specification for panel data: Monte Carlo evidence and
an application to employment equations”, The Review of Economic Studies, Vol. 58 No. 2,
pp. 277-297.
Aupperle, K.E., Carroll, A.B. and Hatfield, J.D. (1985), “An empirical examination of the relationship
between corporate social responsibility and profitability”, Academy of Management Journal,
Vol. 28 No. 2, pp. 446-463.
Barnett, M.L. (2007), “Stakeholder influence capacity and the variability of financial returns to
corporate social responsibility”, Academy of Management Review, Vol. 32 No. 3, pp. 794-816.
Bebchuk, L.A. and Weisbach, M.S. (2010), “The state of corporate governance research”, The Review of
Financial Studies, Vol. 23 No. 3, pp. 939-961.
Becker, C.L., Defond, M.L., Jiambalvo, J. and Subramanyam, K. (1998), “The effect of audit quality on
earnings management”, Contemporary Accounting Research, Vol. 15 No. 1, pp. 1-24.
Bozzolan, S., Fabrizi, M., Mallin, C.A. and Michelon, G. (2015), “Corporate social responsibility and
earnings quality: international evidence”, The International Journal of Accounting, Vol. 50 No. 4,
pp. 361-396.
Burgstahler, D. and Dichev, I. (1997), “Earnings management to avoid earnings decreases and losses”,
Journal of Accounting and Economics, Vol. 24 No. 1, pp. 99-126.
Campbell, J.L. (2007), “Why would corporations behave in socially responsible ways? An institutional
theory of corporate social responsibility”, Academy of Management Review, Vol. 32 No. 3,
pp. 946-967.
Cespa, G. and Cestone, G. (2007), “Corporate social responsibility and managerial entrenchment”,
Journal of Economics & Management Strategy, Vol. 16 No. 3, pp. 741-771.
Chen, H. and Wang, X. (2011), “Corporate social responsibility and corporate financial performance in
China: an empirical research from Chinese firms”, Corporate Governance: The International
Journal of Business in Society, Vol. 11 No. 4, pp. 361-370.
Cheng, S., Lin, K.Z. and Wong, W. (2016), “Corporate social responsibility reporting and firm
performance: evidence from China”, Journal of Management & Governance, Vol. 20 No. 3,
pp. 503-523.
Chi, W., Lisic, L.L. and Pevzner, M. (2011), “Is enhanced audit quality associated with greater real
earnings management?”, Accounting Horizons, Vol. 25 No. 2, pp. 315-335.
Cho, E. and Chun, S. (2016), “Corporate social responsibility, real activities earnings management, and
corporate governance: evidence from Korea”, Asia-Pacific Journal of Accounting & Economics,
Vol. 23 No. 4, pp. 400-431.
 Ciciretti, R., Kobeissi, N. and Zhu, Y. (2014), “Corporate social responsibility and financial performance: Corporate
an analysis of bank community responsibility”, International Journal of Banking, Accounting social
and Finance, Vol. 5 No. 4, pp. 342-373.
responsibility
Cohen, D.A. and Zarowin, P. (2010), “Accrual-based and real earnings management activities around
seasoned equity offerings”, Journal of Accounting and Economics, Vol. 50 No. 1, pp. 2-19.
Cyert, R.M. and March, J.G. (1963), A Behavioral Theory of the Firm, Englewood Cliffs, NJ, p. 2.
Davidson, R., Goodwin‐Stewart, J. and Kent, P. (2005), “Internal governance structures and earnings
management”, Accounting & Finance, Vol. 45 No. 2, pp. 241-267.
Davis, K. (1973), “The case for and against business assumption of social responsibilities”, Academy of
Management Journal, Vol. 16 No. 2, pp. 312-322.
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

Dechow, P.M., Sloan, R.G. and Sweeney, A.P. (1995), “Detecting earnings management”, Accounting
Review, Vol. 70 No. 2, pp. 193-225.
Dechow, P.M., Sloan, R.G. and Sweeney, A.P. (1996), “Causes and consequences of earnings
manipulation: an analysis of firms subject to enforcement actions by the SEC”, Contemporary
Accounting Research, Vol. 13 No. 1, pp. 1-36.
Defond, M.L. and Jiambalvo, J. (1994), “Debt covenant violation and manipulation of accruals”, Journal
of Accounting and Economics, Vol. 17 No. 1, pp. 145-176.
Degeorge, F., Patel, J. and Zeckhauser, R. (1999), “Earnings management to exceed thresholds”, The
Journal of Business, Vol. 72 No. 1, pp. 1-33.
Dianita, P.S. (2011), “Analysis of the effect of corporate social responsibility on financial performance
with earnings management as a moderating variable”, Journal of Modern Accounting and
Auditing, Vol. 7 No. 10, p. 1034.
Di Giuli, A. and Kostovetsky, L. (2014), “Are red or blue companies more likely to go green? Politics and
corporate social responsibility”, Journal of Financial Economics, Vol. 111 No. 1, pp. 158-180.
Dingwerth, K. and Eichinger, M. (2010), “Tamed transparency: how information disclosure under the
global reporting initiative fails to empower”, Global Environmental Politics, Vol. 10 No. 3, pp. 74-96.
Doğan, M. and Yildiz, F. (2013), “The impact of the board of directors’ size on the bank’s performance:
evidence from Turkey”, European Journal of Business and Management, Vol. 5 No. 6, pp. 130-140.
Fama, E.F. and French, K.R. (1998), “Taxes, financing decisions, and firm value”, The Journal of
Finance, Vol. 53 No. 3, pp. 819-843.
Fombrun, C.J., Gardberg, N.A. and Barnett, M.L. (2000), “Opportunity platforms and safety nets: corporate
citizenship and reputational risk”, Business and Society Review, Vol. 105 No. 1, pp. 85-106.
Foster, D. and Jonker, J. (2005), “Stakeholder relationships: the dialogue of engagement”, Corporate
Governance: The International Journal of Business in Society, Vol. 5 No. 5, pp. 51-57.
García Osma, B., Gill De Albornoz Noguer, B. and Gisbert Clemente, A. (2005), “La investigación
sobre earnings managements”, Revista española de financiación y contabilidad, Vol. 34 No. 34,
pp. 1001-1033.
Gavana, G., Gottardo, P. and Moisello, A.M. (2017), “Earnings management and CSR disclosure: family
vs non-family firms”, Sustainability, Vol. 9 No. 12, p. 2327.
Handelman, J.M. and Arnold, S.J. (1999), “The role of marketing actions with a social dimension:
appeals to the institutional environment”, The Journal of Marketing, Vol. 63 No. 3, pp. 33-48.
Healy, P.M. and Wahlen, J.M. (1999), “A review of the earnings management literature and its
implications for standard setting”, Accounting Horizons, Vol. 13 No. 4, pp. 365-383.
Hillman, A.J. and Keim, G.D. (2001), “Shareholder value, stakeholder management, and social issues:
what’s the bottom line?”, Strategic Management Journal, Vol. 22 No. 2, pp. 125-139.
Inoue, Y. and Lee, S. (2011), “Effects of different dimensions of corporate social responsibility on
corporate financial performance in tourism-related industries”, Tourism Management, Vol. 32
No. 4, pp. 790-804.
 APJBA Johnson, E.N., Fleischman, G.M., Valentine, S. and Walker, K.B. (2012), “Managers’ ethical evaluations
of earnings management and its consequences”, Contemporary Accounting Research, Vol. 29
No. 3, pp. 910-927.
Jones, J. (1991), “Earnings management during import relief investigations”, Journal of Accounting
Research, Vol. 29 No. 2, pp. 193-228.
Kim, Y., Park, M.S. and Wier, B. (2012), “Is earnings quality associated with corporate social
responsibility?”, The Accounting Review, Vol. 87 No. 3, pp. 761-796.
Lambert, R.A. (2001), “Contracting theory and accounting”, Journal of Accounting and Economics,
Vol. 32 Nos 1-3, pp. 3-87.
Lau, C., Lu, Y. and Liang, Q. (2016), “Corporate social responsibility in China: a corporate governance
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

approach”, Journal of Business Ethics, Vol. 136 No. 1, pp. 73-87.

Li, Q., Luo, W., Wang, Y. and Wu, L. (2013), “Firm performance, corporate ownership, and corporate social
responsibility disclosure in China”, Business Ethics: A European Review, Vol. 22 No. 2, pp. 159-173.
Liang, Q., Xu, P. and Jiraporn, P. (2013), “Board characteristics and Chinese bank performance”, Journal
of Banking & Finance, Vol. 37 No. 8, pp. 2953-2968.
Liao, L., Lin, T.P. and Zhang, Y. (2016), “Corporate board and corporate social responsibility assurance:
evidence from China”, Journal of Business Ethics, Vol. 150 No. 1, pp. 1-15.
Lin, C.-H., Yang, H.-L. and Liou, D.-Y. (2009), “The impact of corporate social responsibility on financial
performance: evidence from business in Taiwan”, Technology in Society, Vol. 31 No. 1, pp. 56-63.
Liu, M., Shi, Y., Wilson, C. and Wu, Z. (2017), “Does family involvement explain why corporate social
responsibility affects earnings management?”, Journal of Business Research, Vol. 75 No. C, pp. 8-16.
Lo, K. (2008), “Earnings management and earnings quality”, Journal of Accounting and Economics,
Vol. 45 Nos 2/3, pp. 350-357.
Lynch, B. (2010), “An examination of environmental reporting by Australian state government
departments”, Accounting Forum, Vol. 34 No. 1, pp. 32-45.
Mcguire, J.B., Sundgren, A. and Schneeweis, T. (1988), “Corporate social responsibility and firm
financial performance”, Academy of Management Journal, Vol. 31 No. 4, pp. 854-872.
Mcwilliams, A. and Siegel, D. (2001), “Corporate social responsibility: a theory of the firm perspective”,
Academy of Management Review, Vol. 26 No. 1, pp. 117-127.
Ma, S. and Tian, G. (2014), “Board composition, board activity and ownership concentration, the impact
on firm performance”, available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2496168
Marcus, A. (1989), “The deterrent to dubious corporate behavior: profitability, probability and safety
recalls”, Strategic Management Journal, Vol. 10 No. 3, pp. 233-250.
Margolis, J.D. and Walsh, J.P. (2003), “Misery loves companies: rethinking social initiatives by
business”, Administrative Science Quarterly, Vol. 48 No. 2, pp. 268-305.
Margolis, J.D., Elfenbein, H.A. and Walsh, J.P. (2007), “Does it pay to be good? A meta-analysis and
redirection of research on the relationship between corporate social responsibility and financial
performance”, working paper, University of Michigan, Ann Arbor, MI.
Margolis, J.D., Elfenbein, H.A. and Walsh, J.P. (2009), “Does it pay to be good… and does it matter?
A meta-analysis of the relationship between corporate social and financial performance,
available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1866371
Marquis, C. and Qian, C. (2013), “Corporate social responsibility reporting in China: symbol or
substance?”, Organization Science, Vol. 25 No. 1, pp. 127-148.
Martínez-Ferrero, J., Banerjee, S. and García-Sánchez, I.M. (2016), “Corporate social responsibility as a
strategic shield against costs of earnings management practices”, Journal of Business Ethics,
Vol. 133 No. 2, pp. 305-324.
Matten, D. and Moon, J. (2008), “Implicit’ and ‘explicit’ CSR: A conceptual framework for a comparative
understanding of corporate social responsibility”, Academy of Management Review, Vol. 33
No. 2, pp. 404-424.
 Mi, Z. and Wang, X. (2000), “Agency cost and the crisis of China’s SOE”, China Economic Review, Corporate
Vol. 11 No. 3, pp. 297-317. social
Muñoz, R.M., Pablo, J.D.S.D. and Peña, I. (2015), “Linking corporate social responsibility and financial responsibility
performance in Spanish firms”, European Journal of International Management, Vol. 9 No. 3,
pp. 368-383.
Nakao, Y., Amano, A., Matsumura, K., Genba, K. and Nakano, M. (2007), “Relationship between
environmental performance and financial performance: an empirical analysis of Japanese
corporations”, Business Strategy and the Environment, Vol. 16 No. 2, pp. 106-118.
Negash, M. (2001), “Debt, tax shield and bankruptcy costs: some evidence from JSE”, Investment
Analysts Journal, Vol. 30, pp. 33-44.
Nickell, S. (1981), “Biases in dynamic models with fixed effects”, Econometrica: Journal of the
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

Econometric Society, Vol. 49 No. 6, pp. 1417-1426.

Noronha, C., Tou, S., Cynthia, M. and Guan, J.J. (2013), “Corporate social responsibility reporting in
China: an overview and comparison with major trends”, Corporate Social Responsibility and
Environmental Management, Vol. 20 No. 1, pp. 29-42.
Orlitzky, M., Schmidt, F.L. and Rynes, S.L. (2003), “Corporate social and financial performance: a meta-
analysis”, Organization Studies, Vol. 24 No. 3, pp. 403-441.
Phillips, P.A. and Sipahioglu, M.A. (2004), “Performance implications of capital structure: evidence
from quoted UK organisations with hotel interests”, The Service Industries Journal, Vol. 24 No. 5,
pp. 31-51.
Phillips, R., Freeman, R.E. and Wicks, A.C. (2003), “What stakeholder theory is not”, Business Ethics
Quarterly, Vol. 13 No. 4, pp. 479-502.
Price, J.M. and Sun, W. (2017), “Doing good and doing bad: the impact of corporate social responsibility
and irresponsibility on firm performance”, Journal of Business Research, Vol. 80 No. C, pp. 82-97.
Prior, D., Surroca, J. and Tribó, J.A. (2008), “Are socially responsible managers really ethical? Exploring
the relationship between earnings management and corporate social responsibility”, Corporate
Governance: An International Review, Vol. 16 No. 3, pp. 160-177.
Rajput, N., Batra, G. and Pathak, R. (2012), “Linking CSR and financial performance: an empirical
validation”, Problems and Perspectives in Management, Vol. 10 No. 2, pp. 42-49.
Roychowdhury, S. (2006), “Earnings management through real activities manipulation”, Journal of
Accounting and Economics, Vol. 42 No. 3, pp. 335-370.
Solomon, A. and Lewis, L. (2002), “Incentives and disincentives for corporate environmental
disclosure”, Business Strategy and the Environment, Vol. 11 No. 3, pp. 154-169.
Sundaramurthy, C. (2000), “Antitakeover provisions and shareholder value implications: a review and
a contingency framework”, Journal of Management, Vol. 26 No. 5, pp. 1005-1030.
Surroca, J. and Tribó, J.A. (2008), “Managerial entrenchment and corporate social performance”,
Journal of Business Finance & Accounting, Vol. 35 No. 5, pp. 748-789.
Surroca, J. and Tribó, J.A. (2009), “Is managerial entrenchment always bad?: a CSR approach”,
working paper.
Tang, Z., Hull, C.E. and Rothenberg, S. (2012), “How corporate social responsibility engagement
strategy moderates the CSR–financial performance relationship”, Journal of Management
Studies, Vol. 49 No. 7, pp. 1274-1303.
Teoh, S.H., Welch, I. and Wazzan, C.P. (1999), “The effect of socially activist investment policies on the
financial markets: evidence from the South African boycott”, The Journal of Business, Vol. 72
No. 1, pp. 35-89.
Turban, D.B. and Greening, D.W. (1997), “Corporate social performance and organizational attractiveness
to prospective employees”, Academy of Management Journal, Vol. 40 No. 3, pp. 658-672.
Van Beurden, P. and Gössling, T. (2008), “The worth of values – a literature review on the relation
between corporate social and financial performance”, Journal of Business Ethics, Vol. 82 No. 2,
pp. 407-424.
 APJBA Van Der Laan Smith, J., Adhikari, A. and Tondkar, R.H. (2005), “Exploring differences in social
disclosures internationally: a stakeholder perspective”, Journal of Accounting and Public Policy,
Vol. 24 No. 2, pp. 123-151.
Veronica Siregar, S. and Bachtiar, Y. (2010), “Corporate social reporting: empirical evidence from
Indonesia Stock exchange”, International Journal of Islamic and Middle Eastern Finance and
Management, Vol. 3 No. 3, pp. 241-252.
Waddock, S.A. and Graves, S.B. (1997), “The corporate social performance-financial performance link”,
Strategic Management Journal, Vol. 18 No. 4, pp. 303-319.
Withisuphakorn, P. and Jiraporn, P. (2016), “The effect of firm maturity on corporate social
responsibility (CSR): do older firms invest more in CSR?”, Applied Economics Letters, Vol. 23
No. 4, pp. 298-301.
Downloaded by UNIVERSITY OF NEW ENGLAND (AUS) At 21:41 30 October 2018 (PT)

Wong, E.M., Ormiston, M.E. and Tetlock, P.E. (2011), “The effects of top management team integrative
complexity and decentralized decision making on corporate social performance”, Academy of
Management Journal, Vol. 54 No. 6, pp. 1207-1228.
Wright, P. and Ferris, S.P. (1997), “Agency conflict and corporate strategy: the effect of divestment on
corporate value”, Strategic Management Journal, Vol. 18 No. 1, pp. 77-83.
Zahra, S.A., Priem, R.L. and Rasheed, A.A. (2005), “The antecedents and consequences of top
management fraud”, Journal of Management, Vol. 31 No. 6, pp. 803-828.
Zang, A.Y. (2011), “Evidence on the trade-off between real activities manipulation and accrual-based
earnings management”, The Accounting Review, Vol. 87 No. 2, pp. 675-703.
Zhang, K.-M. and Wen, Z.-G. (2008), “Review and challenges of policies of environmental protection and
sustainable development in China”, Journal of Environmental Management, Vol. 88 No. 4,
pp. 1249-1261.
Zhao, Y., Chen, K.H., Zhang, Y. and Davis, M. (2012), “Takeover protection and managerial myopia:
evidence from real earnings management”, Journal of Accounting and Public Policy, Vol. 31 No. 1,
pp. 109-135.
Zhu, Y., Sun, L.-Y. and Leung, A.S. (2014), “Corporate social responsibility, firm reputation, and firm
performance: the role of ethical leadership”, Asia Pacific Journal of Management, Vol. 31 No. 4,
pp. 925-947.
Zu, L. and Song, L. (2009), “Determinants of managerial values on corporate social responsibility:
evidence from China”, Journal of Business Ethics, Vol. 88 No. 1, pp. 105-117.

Corresponding author
Tehmina Khan can be contacted at: tehmina.khan@rmit.edu.au

For instructions on how to order reprints of this article, please visit our website:
www.emeraldgrouppublishing.com/licensing/reprints.htm
Or contact us for further details: permissions@emeraldinsight.com