Corporate social responsibility, family ownership and earnings management: the case of Indonesia
ISSN: 1747-1117
Article publication date: 29 January 2020
Issue publication date: 22 January 2021
Abstract
Purpose
This paper aims to examine the association of corporate social responsibility (CSR), family ownership and earnings management.
Design/methodology/approach
The authors specifically examine mining companies listed in Indonesia Stock Exchange during 2012-2014. Total observations are 105 firm-years. Research data are collected from sustainability reports, annual reports and annual financial statements. Data are analysed using panel data regression.
Findings
The evidence suggests a negative association between corporate social responsibility disclosures (CSRDs) and earnings management. The authors also examine the direct and moderating role of family ownership. The authors find a positive association between family ownership and earnings management. In addition, family ownership strengthens the negative association between CSR and earnings management.
Research limitations/implications
This research only examines mining companies listed in Indonesia Stock Exchange, which limit the generalisation of the results.
Practical implications
The results should useful for: investors wishing to use the level of CSRD as an indicator of firm ethics, especially in relation to family-owned firms; capital-market regulators wishing to improve market transparency by introducing requirements to encourage more CSRD; and other users of financial statements, especially financial analysts to consider ownership structure, specifically family ownership.
Originality/value
Previous studies have mainly focussed on companies in the USA. This paper adds to the body of knowledge regarding whether the positive relationship between family ownership and CSR is also present outside the USA, especially in emerging countries. Further, this study examines the effect of family ownership on the association of CSR and earnings management, which rarely examined in previous studies.
Keywords
Acknowledgements
The second author would like to acknowledge the support provided by the Directorate of Higher Education (DIKTI) in the form of a research grant.
Citation
Kumala, R. and Siregar, S.V. (2021), "Corporate social responsibility, family ownership and earnings management: the case of Indonesia", Social Responsibility Journal, Vol. 17 No. 1, pp. 69-86. https://doi.org/10.1108/SRJ-09-2016-0156
Publisher
:Emerald Publishing Limited
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