Sustainability disclosure and earnings management

Velayutham, Eswaran (2018) Sustainability disclosure and earnings management. In: Research Handbook of Finance and Sustainability. Edward Elgar Publishing Limited, Cheltenham, United Kingdom, pp. 532-549. ISBN 9781786432629


Abstract

This chapter reviews the relationship between sustainability disclosure and earnings management. Sustainability disclosures included in this chapter are environmental, social and governmental (ESG) qualities of firms. There are two competing views of arguments that are discussed in this chapter about the relationships between sustainability disclosures and earnings management, namely, ethical orientation and opportunistic orientation. Ethical orientation predicts that ethical managers believe that socially responsible firms prefer to have long-term relationships with their stakeholders. As a result theses managers provide more value relevant information to the stakeholders to make their decisions correctly. On the other hand, managers disclose a substantial amount of sustainability information as a tool to get support from major stakeholders of firms when they engage in earnings management. Agency, stakeholder, legitimacy and signaling theories are discussed to explain the above relationships. This chapter also presents measures and methods of sustainability disclosure and earnings management. Finally, this chapter ends with addressing potential endogeneity issue, the main conclusion, and direction for further research.


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Item Type: Book Chapter (Commonwealth Reporting Category B)
Refereed: Yes
Item Status: Live Archive
Faculty/School / Institute/Centre: Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021)
Faculty/School / Institute/Centre: Historic - Faculty of Business, Education, Law and Arts - School of Commerce (1 Jul 2013 - 17 Jan 2021)
Date Deposited: 05 Aug 2020 06:57
Last Modified: 07 Oct 2020 05:37
Uncontrolled Keywords: sustainability disclosure; earnings management
Fields of Research (2008): 15 Commerce, Management, Tourism and Services > 1502 Banking, Finance and Investment > 150201 Finance
15 Commerce, Management, Tourism and Services > 1501 Accounting, Auditing and Accountability > 150106 Sustainability Accounting and Reporting
Fields of Research (2020): 35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3502 Banking, finance and investment > 350202 Finance
35 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 3501 Accounting, auditing and accountability > 350107 Sustainability accounting and reporting
Identification Number or DOI: https://doi.org/10.4337/9781786432636.00037
URI: http://eprints.usq.edu.au/id/eprint/36256

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