Forcing responsibility? Examining earnings management induced by mandatory corporate social responsibility : evidence from India
Purpose: This study aims to investigate the impact of mandatory corporate social responsibility (CSR) spending legislation on the earnings management strategies of firms. Design/methodology/approach: The authors use panel data regression models to analyze the data for this study. This study covers the post-legislation period, which spans over five years from the financial year ending March 2015 to the financial year ending March 2019. Findings: The results show that firms manipulate accounting measures to avoid breaching the cut-off criteria for mandatory CSR. In particular, the results show that firms operating around the operating revenue threshold misclassify operating revenue as non-operating revenue. In contrast, firms operating around the net worth and net profit thresholds do downward real and accrual earnings management. These results are consistent with several robustness measures. Originality/value: To the best of the authors’ knowledge, this is the first study that examines the impact of mandatory CSR spending on earnings management.
Year of publication: |
2021
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Authors: | Bansal, Manish ; Kumar, Vivek |
Published in: |
Review of Accounting and Finance. - Emerald, ISSN 1475-7702, ZDB-ID 2170463-6. - Vol. 20.2021, 2 (16.08.), p. 194-216
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Publisher: |
Emerald |
Saved in:
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