The Effect of Corporate Social Responsibility on Earnings Management and Investors' Response to Non-Financial Companies in Indonesia
Keywords:
CSR Disclosure, Earnings Management, Investors' ResponseAbstract
The novelty of the study examines the effect of CSR disclosure on two factors that appear within the company, namely internal factors in the form of earnings management by company management and external factors in the form of investors’ responses by investors outside the company. This study aims to test empirical evidence about the effect of CSR disclosure on earnings management and investors’ response to non-financial sector of companies in Indonesia. The research data is sourced from 720 sustainability report and annual report data of non-financial companies listed on the IDX during 2018-2021 period with a purposive sampling method. The results showed that CSR disclosure has a negative effect on earnings management and CSR disclosure has a positive effect on investors’ response. The findings of this study indicate that CSR disclosure reflects ethical behavior so that financial reports are more transparent and earnings management practices will decrease, while CSR disclosure provides a signal in the form of good news that can attract investors to buy company shares.
References
Alexander, N., & Palupi, A. (2020). Pengaruh Corporate Social Responsibility Reporting terhadap Manajemen Laba. Jurnal Bisnis Dan Akuntansi, 22(1), 105–112. https://doi.org/10.34208/jba.v22i1.628
Ben Amar, A., & Chakroun, S. (2018). Do Dimensions of Corporate Social Responsibility Affect Earnings Management? Evidence from France. Journal of Financial Reporting and Accounting, 16(2), 348–370. https://doi.org/https://doi.org/10.1108/JFRA-05-2017-0033
Bougie, R., & Sekaran, U. (2020). Research Methods for Business, a skill building approach (8th ed.). John Wiley & Sons, Inc.
Chiu, A.-A., Chen, L.-N., & Hu, J.-C. (2020). A Study of the Relationship between Corporate Social Responsibility Report and the Stock Market. Sustainability, 12(21), 9200. https://doi.org/10.3390/su12219200
Choi, H., Choi, B., & Byun, J. (2018). The Relationship between Corporate Social Responsibility and Earnings Management: Accounting for Endogeneity. Investment Management and Financial Innovations, 15(4), 69–84. https://doi.org/10.21511/imfi.15(4).2018.06
Damayanthi, I. G. A. E. (2019). Fenomena Faktor yang Mempengaruhi Nilai Perusahaan. Jurnal Ilmiah Akuntansi Dan Bisnis, 14(2), 208. https://doi.org/10.24843/JIAB.2019.v14.i02.p06
Dewi, P. P., & Rego, C. M. Do. (2018). Kompensasi Bonus, Kepemilikan Keluarga dan Manajemen Laba. Jurnal Ilmiah Akuntansi & Bisnis, 3(1), 71–81. https://doi.org/https://doi.org/10.38043/jiab.v3i1.2100
Faisal, F., Prasetya, A. R., Chariri, A., & Haryanto, H. (2018). The Relationship between Corporate Social Responsibility Disclosure and Earnings Management: Is it a Complement Mechanism or a Substitute Mechanism? International Journal of Business Governance and Ethics, 13(1), 1–14.
Ghozali, I. (2021). Aplikasi Analisis Multivariate dengan Program IBM SPSS 26 (10th ed.). Badan Penerbit Universitas Diponegoro.
Gonçalves, T., Gaio, C., & Ferro, A. (2021). Corporate Social Responsibility and Earnings Management: Moderating Impact of Economic Cycles and Financial Performance. Sustainability, 13(17), 9969. https://doi.org/10.3390/su13179969
Habbash, M., & Haddad, L. (2019). The Impact of Corporate Social Responsibility on Earnings Management Practices: Evidence from Saudi Arabia. Social Responsibility Journal, 16(8), 1073–1085. https://doi.org/10.1108/SRJ-09-2018-0232
Hafidzi, A. H., & Qomariah, N. (2020). Impact of Corporate Social Responsibility on Stock Prices through Financial Performance in Manufacturing Companies Listed on the IDX in the Covid Era 19. International Journal of Advanced Research in Engineering and Technology (IJARET), 11(11), 1510–1520. https://doi.org/10.34218/IJARET.11.11.2020.139
Hajawiyah, A., Siti Pratiwi, I., Ramadhini, A., Shauki, E., & Diyanty, V. (2020). CSR & Earnings Management: An Assessment of Firm Ethics. KnE Social Sciences, 2020, 1351–1369. https://doi.org/10.18502/kss.v4i6.6686
Hussain, N., Javed, B., & Sarmad, M. (2019). Corporate Social Responsibility and Investor’s Intention to Invest: Analyzing the Role of Corporate Identity and Corporate Image. Pakistan Journal of Commerce and Social Sciences, 13(1), 150–164.
Kim, S. H., Udawatte, P., & Yin, J. (2019). The Effects of Corporate Social Responsibility on Real and Accrual‐based Earnings Management: Evidence from China. Australian Accounting Review, 29(3), 580–594. https://doi.org/10.1111/auar.12235
Maqbool, S., & Zamir, N. (2021). Corporate Social Responsibility and Institutional Investors: The Intervening Effect of Financial Performance. Journal of Economic and Administrative Sciences, 37(2), 238–252. https://doi.org/10.1108/JEAS-08-2019-0089
Moratis, L., & van Egmond, M. (2018). Concealing Social Responsibility? Investigating the Relationship between CSR, Earnings Management and the Effect of Industry through Quantitative Analysis. International Journal of Corporate Social Responsibility, 3(1), 8. https://doi.org/10.1186/s40991-018-0030-7
Murashima, M. (2019). Does CSR Benefit Firms in Japan? Comparisons with Investors’ Behaviors in The US and Europe. Journal of the Graduate School of Asia-Pacific Studies, 3(37), 39–55.
Murashima, M. (2020). Do Investors’ Reactions to CSR-Related News Communication Differ by Shareholder? An Empirical Analysis from Japan. Corporate Governance: The International Journal of Business in Society, 20(5), 781–796. https://doi.org/10.1108/CG-11-2019-0346
Palacios-Manzano, M., Gras-Gil, E., & Santos-Jaen, J. M. (2021). Corporate Social Responsibility and Its Effect on Earnings Management: an Empirical Research on Spanish Firms. Total Quality Management & Business Excellence, 32(7–8), 921–937. https://doi.org/10.1080/14783363.2019.1652586
Pérez, A., García de los Salmones, M. del M., & López-Gutiérrez, C. (2020). Market Reactions to CSR News in Different Industries. Corporate Communications: An International Journal, 25(2), 243–261. https://doi.org/10.1108/CCIJ-05-2019-0056
Rahmawardani, D. D., & Muslichah, M. (2020). CORPORATE SOCIAL RESPONSIBILITY TERHADAP MANAJEMEN LABA DAN KINERJA PERUSAHAAN. Jurnal Riset Akuntansi Kontemporer, 12(2), 52–59. https://doi.org/10.23969/jrak.v12i2.2251
Rokhayati, H., Nahartyo, E., & H, H. (2019). Effect of Financial Information and Corporate Social Responsibility Disclosure on Investment Decision: Evidence from an Experimental Study. Asian Journal of Business and Accounting, 12(1), 129–164. https://doi.org/10.22452/ajba.vol12no1.5
Ryandono, M. N. H. (2022, February 15). Reaksi Saham Syariah di Pasar Modal Indonesia dalam Menghadapi Pandemi COVID-19. https://news.unair.ac.id/2022/02/15/reaksi-saham-syariah-di-pasar-modal-indonesia-dalam-menghadapi-pandemi-covid-19/?lang=id
Sabatini, K., & Sudana, I. P. (2019). Pengaruh Pengungkapan Corporate Social Responsibility pada Nilai Perusahaan dengan Manajemen Laba Sebagai Variabel Moderasi. Jurnal Ilmiah Akuntansi Dan Bisnis, 14(1), 56–69. https://doi.org/10.24843/JIAB.2019.v14.i01.p06
Soda, E. (2016, January 27). PT Timah Diduga Buat Laporan Keuangan Fiktif. Majalah Tambang Online. https://www.tambang.co.id/pt-timah-diduga-membuat-laporan-keuangan-fiktif
Sugianto, D. (2019, April 25). Garuda Diduga Manipulasi Laporan Keuangan, Bagaimana Pengawasan Rini? DetikFinance. https://finance.detik.com/bursa-dan-valas/d-4524789/garuda-diduga-manipulasi-laporan-keuangan-bagaimana-pengawasan-rini
Supriyono, E., Almasyhari, A. K., Suhardjanto, D., & Rahmawati, S. (2015). The impact of corporate governance on corporate social disclosure: comparative study in South East Asia. International Journal of Monetary Economics and Finance, 8(2), 143–161. https://doi.org/10.1504/IJMEF.2015.070779
Suroto, S., & Nugraha, Ch. A. (2019). The Effect of Corporate Social Responsibility Disclosures and Financial Information on Abnormal Return (Empirical Study on Food and Beverage Sub-sector Manufacturing Companies Listed on Indonesian Stock Exchange in 2013-2017). Media Ekonomi Dan Manajemen, 34(1), 102–115. https://doi.org/10.24856/mem.v34i1.935
Suryani, A. W., & Wibowo, A. A. (2022). Analisis Pengaruh Corporate Social Responsibility terhadap Earnings Management: Etis atau Oportunis? Jurnal Kajian Akuntansi, 6(1), 70–89. https://doi.org/10.33603/jka.v6i1.5641
Tran, N. M., Tran, M. H., & Phan, T. D. (2022). Corporate Social Responsibility and Earning Management: Evidence from Listed Vietnamese Companies. Cogent Business & Management, 9(1), 1–15. https://doi.org/10.1080/23311975.2022.2114303
Wahyono, W., Novianto, A. N., & Putri, E. (2019). The Effect of CSR Disclosure, Corporate Governance Mechanism, Auditor Independence, Auditor Quality, and Firm Size on Earning Management. Riset Akuntansi Dan Keuangan Indonesia, 4(3), 156–170. https://doi.org/10.23917/reaksi.v4i3.9339
Winarno, W. A., Kustono, A. S., Effendi, R., Mas’ud, I., & Wardhaningrum, O. A. (2021). Corporate Social Responsibility and Tax Avoidance: Evidence from Indonesia. AKRUAL: Jurnal Akuntansi, 13(1), 69–82. https://doi.org/10.26740/jaj.v13n1.p69-82
Yi, Y., Zhang, Z., & Yan, Y. (2021). Kindness is Rewarded! The Impact of Corporate Social Responsibility on Chinese Market Reactions to the COVID-19 Pandemic. Economics Letters, 208, 110066. https://doi.org/10.1016/j.econlet.2021.110066
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Muhammad Zaki Adriansyah Zaman, Edy Supriyono, Nurmadi Harsa Sumarta, Corina Joseph
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-NonCommercial 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
Abstract views: 172
