Does Corporate Governance And Corporate Social Responsibility Affect Earnings Management Practices?

Abstract

The study captures the impact of corporate governance characteristics and corporate social responsibility on the earnings management. Corporate governance mechanism in developing countries like Pakistan is not strong like that placed in the developed economies. To capture this unique context, the study collects data from the financial disclosures of the 196 non-financial firms. The results exhibit that having certain governance characteristics either good or bad do create a difference when finance managers decide to manage the earnings. It is found that the firms which have strong corporate governance mechanism and which perform CSR activities coupled with healthy financial status do not prefer managing their earnings.