Mandatory CSR Disclosure and Corporate Earning Management
Using A-share listed companies in China from 2005 to 2020,we empirically in-vestigate whether mandatory disclosure of social responsibility information can inhibit corpo-rate earning management with a staggered difference-in-differences(DID)approach.The findings show that CSR disclosure has a significant inhibitory effect on corporate real earning management;this finding still holds after a series of robustness tests including parallel trend test,placebo test,and PSM-DID test.The mechanism test suggests that CSR disclosure can promote corporate management self-regulation to reduce irregularities and excess perks,enhance corporate information transparency to reduce analysts'forecast disagreement,and thus inhibit corporate earning management.Indirect channel evidence suggests that the mar-ginal impact of CSR disclosure on corporate earning management effect is stronger in firms with weaker internal corporate monitoring and higher information asymmetry,thus further supporting the abovementioned channels.Heterogeneity suggests that the inhibitory effect of CSR disclosure on earning management is more significant among firms with high levels of corporate governance as well as strong external pressure,thus demonstrating that corporate governance and external monitoring are guarantees for firms to effectively practice social re-sponsibility.Based on the findings of this paper,strengthening and improving the CSR dis-closure system can effectively enhance the transparency of the capital market.
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