The Influence of Corporate Social Responsibility on Real Earnings Management in Chinese-Listed Companies

Abstract

This study examines the relationship between corporate social responsibility and real earnings management using a sample of Shanghai and Shenzhen A-share listed companies from 2016 to 2020. This paper demonstrates that corporate social responsibility can discourage unethical real earnings management. To assure the validity of the data, this study screens the data based on the following criteria: (1) exclude the samples of financial and insurance firms; (2) eliminate ST and *ST firms; and (3) eliminate the samples with missing model data. There are now 1,311 firm-year observations remaining in this study's sample. This research primarily utilizes Runling Global's social responsibility rating data to measure CSR level. The control variables were SIZE (the natural logarithm of total assets), LEV (the ratio of debt to assets), ROA (the ratio of net income to total assets), GROWTH (the growth rate), BIG4 (the Big Four audit companies), YEAR, and IND. This study synthesizes prior research findings and evaluates corporate social responsibility and real profitability management from a Chinese perspective. This positively impacts the theoretical research and practical development of earnings management for Chinese publicly traded enterprises.