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Article
Publication date: 26 September 2019

Muhammad Safdar Sial, Xuan Vinh Vo, Lara Al-Haddad and Thao Nguyen Trang

The purpose of this paper is to check the impact of female directors on the board and foreign institutional investors on earnings manipulation.

Abstract

Purpose

The purpose of this paper is to check the impact of female directors on the board and foreign institutional investors on earnings manipulation.

Design/methodology/approach

The data sample includes Chinese listed companies on the Shenzhen and Shanghai stock exchanges. The data are collected from China Stock Market and Accounting Research database covering the period from 2010 to 2017. The authors use a dynamic generalized method of moments in the study.

Findings

The findings show that the presence of female director on the board has a significant negative impact on both discretionary accruals and real earning management. However, the authors obtain different results for foreign institutional investor investors. This may be the result of myopia as the foreign institutional stockholders in Chinese companies are looking for quick profit encouraging management to manipulate earnings. the findings survive several robustness tests.

Originality/value

The authors expect the research results provide ample evidence about how female directors affects earnings manipulation, and also hope the research helps to understand how, in China, institutional ownership affects earnings manipulation.

Details

Asia-Pacific Journal of Business Administration, vol. 11 no. 3
Type: Research Article
ISSN: 1757-4323

Keywords

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Article
Publication date: 30 October 2018

Muhammad Safdar Sial, Zheng Chunmei, Tehmina Khan and Vinh Khuong Nguyen

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…

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.

Details

Asia-Pacific Journal of Business Administration, vol. 10 no. 2/3
Type: Research Article
ISSN: 1757-4323

Keywords

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Article
Publication date: 5 August 2019

Muhammad Safdar Sial, Zheng Chunmei and Nguyen Vinh Khuong

This study aims to explore the possibility of a two-way relationship between corporate social responsibility (CSR) and earnings management (accruals and real EM) with the…

Abstract

Purpose

This study aims to explore the possibility of a two-way relationship between corporate social responsibility (CSR) and earnings management (accruals and real EM) with the moderating role of female and independent directors.

Design/methodology/approach

The authors use STATA to test the generalized method of moments 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 rating provided by Rankins.

Findings

The results indicate a significant negative relationship between two-way CSR and accrual-based EM. Moreover, female and independent directors moderate the two-way relationship between CSR and EM.

Research limitations/implications

The present study does not include all financial, insurance and investment firms to impact on CSR and EM. Further research might consist of family ownership to enhance the evidence for an emerging market.

Originality/value

This study primarily contributes to the literature on CSR, female and independent directors, and EM by providing evidence for the moderating role of female and independent directors on the two-way association between CSR and EM.

Details

International Journal of Accounting & Information Management, vol. 27 no. 3
Type: Research Article
ISSN: 1834-7649

Keywords

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