Corporate Social Responsibility (CSR) and Earnings Management: A Literature Review

Posted: 27 Feb 2021

See all articles by Patrick Velte

Patrick Velte

Leuphana University of Lueneburg

Date Written: December 26, 2020


This paper provides insight whether Corporate Social Responsibility (CSR) and earnings management are connected. Based on agency- and stewardship theory the author conducts a literature review and evaluates the empirical results with regard to the CSR-earnings management and the earnings management-CSR link. In this context, CSR reporting and CSR performance are focused as CSR measures. The results of the 33 studies indicate that the majority of the research relies on the CSR-earnings management link, on the US-American capital market and on CSR performance measures. Most of these studies indicate that CSR relates to decreased earnings management in line with stewardship theory. However, also other results exist on the CSR-earnings management link. Research on the earnings management-CSR relationship is of low validity so far in view of the low amount. Comparability of recent research on that topic is in particular limited in view of the heterogeneous CSR and earnings management variables and the endogeneity concerns. Future research is encouraged to address endogeneity tests, include country-specific effects and increase the validity of CSR and earnings management variables. As CSR performance and reporting can have a major impact on earnings quality, the author recommends firms to search for opportunities to make their CSR activities more comprehensive by expanding their CSR reporting and thus providing deeper insights on their CSR performance in line with stakeholders’ interests. The paper is the first literature review on the CSR-earnings management and earnings management-CSR relationship so far. The author explains the main CSR and earnings management variables that have been included in prior empirical research, stresses the limitations of the studies and gives useful recommendations for future research, practice and regulators.

Keywords: corporate social responsibility, earnings management, CSR performance, CSR reporting, stakeholder agency theory, stewardship theory

Suggested Citation

Velte, Patrick, Corporate Social Responsibility (CSR) and Earnings Management: A Literature Review (December 26, 2020). Available at SSRN:

Patrick Velte (Contact Author)

Leuphana University of Lueneburg ( email )

Scharnhorststraße 1
Lüneburg, 21335

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics