The impact of corporate governance and corporate social responsibility on financial performance among publicly listed companies in the Philippines as mediated by real earnings management

• Main Author: Bermundo, Mia B.
• Format: text
• Language: English
• Published: Animo Repository 2019
• Subjects: Corporate governance; Social responsibility of business; Earnings management; Accounting; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/6388; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/13433/viewcontent/BERMUNDO_MIA_REVISED_FINAL_THESIS2.pdf
• Institution: De La Salle University

One of the main objectives of a corporation is the shareholder value maximization. Corporate Social Responsibility (CSR) is an important concept that is being debated and implemented throughout the world. The interest in CSR continues to grow worldwide and while different companies have different approaches to that, more companies adopt collaborative programs aimed at mitigating their negative impact on society and the environment. Furthermore, good corporate governance is needed to enable businesses to operate more effectively, enhance access to capital, mitigate risk, and protect shareholders. It also makes companies more accountable and transparent to investors so as to minimize expropriation and unfairness for shareholders. On the other hand, management may not always achieve such an objective that may force them to employ some earnings management practices to manage reported earnings. Earnings management can be opportunistic or efficient depending on the management’s intention. This study specifically investigates the effect of corporate governance, CSR and real earnings management on financial performance, the effect of corporate governance and CSR on real earnings management and the mediating effect of real earnings management on the effect of corporate governance and CSR on financial performance. The study used Partial Least Square–Structural Equation Modeling (PLS-SEM). It examined 47 publicly listed companies in the Philippines for a four-year period from 2014 to 2017. Results show that real earnings management significantly affect financial performance and corporate governance and CSR has a significant effect on real earnings management. Also the effect of corporate governance on financial performance is mediated by real earnings management. Results of this study call for further studies to address some limitations. Future research may consider including more indicator variables for CSR and corporate governance, and may also cover accrual-based earnings management and include even non-public companies. The efficient perspective of earnings management may also be explored.