- Title
- Does Earnings Quality Influence Corporate Social Responsibility Performance? Empirical Evidence on the Causal Link
- Creator
- Bose, Sudipta; Yu, Chuan
- Relation
- Abacus A Journal of Accounting, Finance and Business Studies Vol. 59, Issue 2, p. 493-540
- Publisher Link
- http://dx.doi.org/10.1111/abac.12286
- Publisher
- John Wiley & Sons
- Resource Type
- journal article
- Date
- 2023
- Description
- The study examines the causal links between earnings quality and corporate social responsibility (CSR) performance using a large sample of United States (US) firms from 1992 to 2013. We first find that the association between earnings quality and CSR performance is positive and significant. We then test the flow of causality using Granger's (1969) lead–lag analysis to determine whether changes in earnings quality cause changes in CSR performance or vice versa. Our findings show that changes in earnings quality cause changes in a firm's CSR performance but not vice versa. Further analysis shows that earnings quality reduces the cost of equity capital for firms with higher CSR performance. These findings suggest that one plausible means by which firms with higher earnings quality can maintain better CSR performance is to reduce their cost of equity capital.
- Subject
- corporate social responsibility (CSR) performance; cost of equity capital; earnings quality; Granger causality
- Identifier
- http://hdl.handle.net/1959.13/1493939
- Identifier
- uon:53674
- Identifier
- ISSN:0001-3072
- Rights
- © 2023 The Authors. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License (https://creativecommons.org/licenses/by-nc-nd/4.0/), which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.
- Language
- eng
- Full Text
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