The Corporate Social Responsibility Disclosure Reflect Ethical and Provides A Signal in the Form of Good News

Muhammad Zaki Adriansyah Zaman; Edy Supriyono; Nurmadi Harsa Sumarta; Corina Joseph

doi:10.26740/jaj.v15n2.p137-150

Authors

Muhammad Zaki Adriansyah Zaman Accounting Department, Faculty of Economics and Business, Universitas Sebelas Maret
Edy Supriyono Accounting Department, Faculty of Economics and Business, Universitas Sebelas Maret
Nurmadi Harsa Sumarta Accounting Department, Faculty of Economics and Business, Universitas Sebelas Maret
Corina Joseph Fakulti Perakaunan, Universiti Teknologi MARA

DOI:

https://doi.org/10.26740/jaj.v15n2.p137-150

Keywords:

CSR Disclosure, Earnings Management, Investors' Response

Abstract

ntroduction/Main Objectives: The study's novelty examines the effect of CSR disclosure on two
factors that appear within the company: 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. Background Problems: This study aims to test empirical evidence about the effect of
CSR disclosure on earnings management and investors’ response to the non-financial sector of
companies in Indonesia. Research Methods: The research data is sourced from 720 sustainability
reports and annual report data of non-financial companies listed on the IDX during 2018-2021
with a purposive sampling method. Finding/Results: The results showed that CSR disclosure hurts
earnings management and positively affects investors’ responses. Conclusion: This study indicate
that CSR disclosure reflects ethical behaviour 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 could 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