Last modified: 2017-08-23
Abstract
This study aims to examine the effect of CSR disclosure on earnings management practices, both in accrual earnings management and real earnings management, also in aggregate practice (accrual and real). This study is expected to provide a more comprehensive picture than previous research, by examining the effect of CSR disclosure on all types of earnings management by the firm. Assisted with NVivo 11 data analysis software, we measured CSR disclosure in 186 annual reports made by 62 manufacturing firms listed on the Indonesia Stock Exchange in the period 2013-2015. Using a quantitative approach, we found evidence that firms with high CSR disclosure would have low levels of earnings management. However, this negative effect is only evident for the accrual earnings management and aggregate earnings management. As for the real earnings management, there is no significant effect of CSR disclosure to this practice. This finding also reinforces the notion of previous research, by providing empirical evidence that CSR-oriented firms tend to prefer accrual earnings management practices rather than real earnings management.