Do female and independent directors explain the two-way relationship between corporate social responsibility and earnings management of Chinese listed firms?

Abstract

Purpose: This study aims to explore the possibility of a two-way relationship between corporate social responsibility (CSR) and earnings management (accruals and real EM) with the moderating role of female and independent directors. Design/methodology/approach: The authors use STATA to test the generalized method of moments on a sample of Chinese listed firms data over the period 2009-2015. The unbalanced sample obtained 3,481 observations from China stock market and accounting research database and CSR rating provided by Rankins. Findings: The results indicate a significant negative relationship between two-way CSR and accrual-based EM. Moreover, female and independent directors moderate the two-way relationship between CSR and EM. Research limitations/implications: The present study does not include all financial, insurance and investment firms to impact on CSR and EM. Further research might consist of family ownership to enhance the evidence for an emerging market. Originality/value: This study primarily contributes to the literature on CSR, female and independent directors, and EM by providing evidence for the moderating role of female and independent directors on the two-way association between CSR and EM. © 2019, Emerald Publishing Limited.