Financial Reporting Quality and Sustainability Information Disclosure in Brazil

23 Pages Posted: 16 Sep 2019

See all articles by João Antônio Salvador de Souza

João Antônio Salvador de Souza

Universidade Federal de Santa Catarina (UFSC)

Leonardo Flach

Universidade Federal de Santa Catarina (UFSC)

Jose Alonso Borba

Universidade Federal de Santa Catarina (UFSC)

Broietti Broietti

Universidade Federal de Santa Catarina (UFSC)

Date Written: September 11, 2019

Abstract

Currently, businesses face an information disclosure approach involving the triple bottom line (social, environmental, and financial). This paper aims to investigate the relationship between corporate social responsibility (CSR) information and financial reporting quality (FRQ). We argue that CSR companies behave differently in preparing financial accounting reports. Recent literature supports this theme, providing two distinct hypotheses: transparent financial reporting and retreatment. We used a sample of 1,181 companies from the years 2012 to 2016 to identify if socially responsible companies have better quality financial accounting information. In contrast to the hypotheses raised, we didn't find a relationship between the CSR disclosures and the FRQ proxies. This suggests that sustainable companies do not explain lower or higher levels of earnings management. Our findings remain unchanged when we replace results management through discretionary accruals for manipulations of operating activities. Estimates with comparable samples also didn’t change the interpretations of the results.

Keywords: Corporate Social Responsibility, Financial Reporting Quality, Earnings Management

JEL Classification: G12, G14, K22, M41, M43

Suggested Citation

Salvador de Souza, João Antônio and Flach, Leonardo and Borba, Jose Alonso and Broietti, Broietti, Financial Reporting Quality and Sustainability Information Disclosure in Brazil (September 11, 2019). Available at SSRN: https://ssrn.com/abstract=3452050 or http://dx.doi.org/10.2139/ssrn.3452050

João Antônio Salvador de Souza

Universidade Federal de Santa Catarina (UFSC) ( email )

Campus Reitor João David Ferreira Lima
Bairro Trindade
Florianopolis, Santa Catarina 88040
Brazil

Leonardo Flach (Contact Author)

Universidade Federal de Santa Catarina (UFSC) ( email )

Campus Reitor João David Ferreira Lima
Bairro Trindade
Florianopolis, Santa Catarina 88040
Brazil

HOME PAGE: http://leonardoflach.paginas.ufsc.br/

Jose Alonso Borba

Universidade Federal de Santa Catarina (UFSC) ( email )

Campus Reitor João David Ferreira Lima
Bairro Trindade
Florianopolis, Santa Catarina 88040
Brazil

Broietti Broietti

Universidade Federal de Santa Catarina (UFSC) ( email )

Campus Reitor João David Ferreira Lima
Bairro Trindade
Florianopolis, Santa Catarina 88040
Brazil

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