top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
open access

Published: 03 December 2018

Do The Earnings Management, Governance, Media Exposure, and Ownership Structure Have Any Effect on ESG Disclosure?

Priskila Adiasih, Avioletta Effendy, Carissa Dea Yuwono, Nadya Octavia

Petra Christian University, Indonesia

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf




Previous study has shown various results for the relationship between good corporate governance (GCG), and company ownership to corporate social responsibility (CSR) governance. The environmental, social and governance (ESG) is one dimension of CSR governance. Using legitimacy theory, this study conducts to answer the gap by exploring real earnings management practice towards ESG. We use financial data and CSR governance from Bloomberg ESG database. The samples are 27 companies for the period 2012-2016. The findings suggest that GCG influence positively to ESG disclosure. In addition, we find that real earnings management (represent by Abnormal Cash Flow from Operation and Abnormal Production) has a positive effect on ESG disclosure. However, no evidence yet exist that Abnormal Discretionary Expense has a significant effect on ESG disclosure. We also demonstrate how the company ownership influences the disclosure. This study contributes to the literature by focusing on real earnings management rather than abnormal discretionary accrual.


  • Aerts, W., and Cormier, D. (2009). Media legitimacy and corporate environmental communication. Accounting, Organizations and Society, 34(1), 1-27.

  • Allegrini, M., & Greco, G. (2013). Corporate boards, audit committees and voluntary disclosure: evidence from Italian Listed Companies. Journal of Management and Governance, 17(1), 187-216.

  • Alotaibi, K. O., and Hussainey, K. (2016). Determinants of CSR disclosure quantity and quality: evidence from non-financial listed firms in Saudi Arabia. International Journal of Disclosure and Governance, 13(4), 364-393.

  • Bajic, S., & Yurtoglu, B. (2018). Which aspects of CSR predict firm market value? Journal of Capital Markets Studies, 2(1), 50–69.

  • Barros, C. P., Boubaker, S., Hamrouni, A. (2013). Corporate governance and voluntary disclosure in France. Journal of Applied Business Research, 29(2), 561–578.

  • Bradford, M., Earp, J. B., Williams, P. F. (2017). Understanding sustainability for socially responsible investing and reporting. Journal of Capital Markets Studies, 1(1), 10-35.

  • Brown, N. and Deegan, C. (1998). The public disclosure of environmental performance information—a dual test of media agenda-setting theory and legitimacy theory. Accounting and Business Research, 29(1), 21-41.

  • Chang, Y. K., Oh, W. Y., Jung, J. C., & Lee, J. Y. (2012). Firm size and corporate social performance: The mediating role of outside director representation. Journal of Leadership & Organizational Studies, 19, 486–500.

  • Chen, C. J. P., Jaggi, B. (2000). Association between independent non-executive directors, family control and financial disclosures in Hong Kong. Journal of Accounting and Public Policy 19(4-5): 285–310.

  • Chih, H. L., Shen, C. H., & Kang, F. C. (2008). Corporate social responsibility, investor protection, and earnings management: Some international evidence. Journal of Business Ethics, 79(1–2), 179–198.

  • Cho, C. (2009). Legitimation strategies used in response to environmental disaster: a French case study of Total S.A.’s Erika and AZF incidents. European Accounting Review, 18(1), 33-62.

  • Choi, J.-S. (1999). An investigation of the initial voluntary environmental disclosures made in Korean semiannual financial reports. Pacific Accounting Review, 11(1), 73–102.

  • Choi, T. H., and Pae, J. (2011). Business ethics and financial reporting quality: Evidence from Korea. Journal of Business Ethics, 103, 403-427.

  • Cohen, D. A., Dey, A., and Lys, T. Z. (2008). Real and accrual-based earnings management in the pre- and post-Sarbanes Oxley periods. The Accounting Review, 83(3), 757-787.

  • Cormier, D., & Gordon, I. M. (2001). An examination of social and environmental reporting strategies. Accounting, Auditing & Accountability Journal, 14(5), 587–617.

  • Daub, C.H. (2007). Assessing the quality of sustainability reporting: an alternative methodological approach. Journal of Cleaner Production, 15(1), 75-85.

  • Deegan, C. (2000b). Firms’ disclosure reactions to major social incidents: Australian evidence. Accounting Forum, 24(1), 101-130. Available at SSRN:

  • Deegan, C. and Gordon, B. (1996). A Study of Environmental Disclosure Practices of Australian Corporation. Accounting and Business Research, 26(3), 187-199.

  • Deephouse, D. L., & Suchman, M. (2008). Legitimacy in organizational institutionalism. The Sage handbook of organizational institutionalism (pp. 49–77). Thousand Oaks: Sage.

  • Dickson, M. A., & Eckman, M. (2008). Media portrayal of voluntary public reporting about corporate social responsibility performance: Does coverage encourage or discourage ethical management? Journal of Business Ethics, 83(4), 725-743.

  • Eccles, R. G., Serafeim, G., & Krzus, M. P. (2011). Market interest in nonfinancial information. Journal of Applied Corporate Finance, 23(4), 113–127.

  • Elzahar, H. Hussainey, K. Mazzi, F. and Tsalavoutas, I. (2015). Economic consequences of key performance indicators’ disclosure quality. International Review of Financial Analysis, 39, 96-112.

  • European Multistakeholder Forum on CSR. (2004). Corporate social responsibility-final results & recommendations. Final Report, available at: stakeholder_forum/info/data/en/CSR%20Forum%20final%20report.pd (accessed October, 15th 2018).

  • Firth, M., Fung, P. M. Y., & Rui, O. M. (2007). Ownership, two-tier board structure, and the informativeness of earnings - evidence from China. Journal of Accounting and Public Policy, 26 (4), 463-496.

  • Frias-Aceituno J.V., Rodriguez-Ariza L., Garcia-Sanchez I.M. (2013). The role of the board in the dissemination of integrated corporate social reporting. Corporate Social Responsibility and Environmental Management 20(4), 219–233.

  • Gallego‐Álvarez, I., Prado‐Lorenzo, J. M., García‐Sánchez, I-M. (2011). Corporate social responsibility and innovation: a resource‐based theory. Management Decision, 49(10), 1709–1727.

  • Giannarakis, G., Konteos, G., Sariannidis N. (2014). Financial, governance and environmental determinants of corporate social responsible disclosure. Management Decision, 52(10), 1928 – 1951.

  • Graham, J. R., Harvey, C. R., Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics 40(1-3), 3–73.

  • Gray, R., Kouhy, R., & Lavers, S. (1995). Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure. Accounting, Auditing & Accountability Journal, 8(2), 47–77.

  • Guoyou, Q., Saixing, Z., Chiming, T., Haitao, Y., & Hailiang, Z. (2013). Stakeholders' influences on corporate green innovation strategy: A case study of manufacturing firms in China. J. Corporate Social Responsibility and Environmental Management, 20(1), 1-14.

  • Haji, A. A. (2013). Corporate social responsibility disclosures over time: evidence from Malaysia. Managerial Auditing Journal, 28(7), 647-676.

  • Ho, S. S. ., & Shun Wong, K. (2001). A study of the relationship between corporate governance structures and the extent of voluntary disclosure. Journal of International Accounting, Auditing, and Taxation, 10(2), 139–156.

  • Hoang, T. (2018). The role of the integrated reporting in raising awareness of environmental, social and corporate governance (ESG) performance. Developments in Corporate Governance and Responsibility, 47–69.

  • Hooghiemstra, R. (2000). Corporate communication and impression management: New perspectives why companies engage in corporate social reporting. Journal of Business Ethics, 27(1/2), 55-68.

  • Islam, M.A., and Deegan, C. (2010). Media pressures and corporate disclosure of social responsibility performance information: a study of two global clothing and sports retail companies. Accounting and Business Research, 40(2), 131-148.

  • Jizi, M. I., Salama, A., Dixon, R., Stratling, R. (2014). Corporate governance and corporate social responsibility disclosure: Evidence from the US banking sector. Journal of Business Ethics, 125(4), 601-615.

  • Johnson, R. A., & Greening, D. W. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of Management Journal, 42, 564–576.

  • Kabir, R, and Thai, H. M. (2017). Does corporate governance shape the relationship between corporate social responsibility and financial performance? Pacific Accounting Review, 29(2), 227-258.

  • Keim, G. D. (1978). Managerial behavior and the social responsibilities debate: goals versus constraints. Academy of Management Journal, 21(1), 57-68.

  • Khan, A., Muttakin, M. B. and Siddiqui, J. (2012). Corporate governance and corporate social responsibility disclosures: evidence from an emerging economy. Journal of Business Ethics, 114(2), 207-223. doi:10.1007/s10551-012-1336-0

  • Khasharmeh, H. and Suwaidan, M.S. (2010). Social responsibility disclosure in corporate annual reports: evidence from the Gulf Cooperation Council countries. International Journal of Accounting, Auditing and Performance Evaluation, 6 (4), 327- 345.

  • Kim, W., Park, K., & Lee, S. (2018). Corporate social responsibility, ownership structure, and firm value: Evidence from Korea. Sustainability, 10(7), 2497. doi:10.3390/su10072497

  • Kim, Y., Park, M.S., Wier, B. (2012). Is earnings quality associated with corporate social responsibility? The Accounting Review, 87(3), 761-796.

  • Kolk, A. (2003). Trends in sustainability reporting by the Fortune Global 250. Business Strategy and the Environment, 12(5), 279–291.

  • Kuo, L., Yeh, C-C., & Yu, H-C. (2012). Disclosure of corporate social responsibility and environmental management: evidence from China. Corporate Social Responsibility and Environmental Management, 19(5), 273–287.

  • Li, J., Mangena, M., & Pike, R. (2012). The effect of audit committee characteristics on intellectual capital disclosure. The British Accounting Review, 44(2), 98-110.

  • Lim, S., Matolcsy, Z., Chow, D. (2007). The association between board composition and different types of voluntary disclosure. European Accounting Review, 16(3), 555–583.

  • Lim, S.-J., Phillips, J. (2008). Embedding CSR values: the global footwear industry’s evolving governance structure. Journal of Business Ethics, 81(1), 143-156.

  • Lipton, M., & Lorsch, J. W. (1992). A modest proposal for improved corporate governance. The Business Lawyer, 48(1), 59–77.

  • Lu, Y., and Abeysekera, I. (2014). Stakeholders' power, corporate characteristics, and social and environmental disclosure: evidence from China. Journal of Cleaner Production, 64, 426-436.

  • Lyon, T. P., & Maxwell, J. W. (2011). Greenwash: Corporate environmental disclosure under threat of audit. Journal of Economics & Management Strategy, 20(1), 3–41.

  • Lyon, T. P., & Montgomery, A. W. (2013). Tweetjacked: The impact of social media on corporate Greenwash. Journal of Business Ethics, 118(4), 747-757.

  • Maistriau, E. A., and Bonardi, J-P. (2014). How much does negative public exposure on environmental issues increase environmental performance? Academy of Management, 2014(1).

  • Martínez-Ferrero, J., Banerjee, S., & García-Sánchez, I. M. (2016). Corporate social responsibility as a strategic shield against costs of earnings management practices. Journal of Business Ethics, 133(2), 305–324.

  • Mohammed, N. F., Ahmed, K., & Ji, X.-D. (2017). Accounting conservatism, corporate governance, and political connections. Asian Review of Accounting, 25(2), 288–318.

  • Mohd Ghazali, N.A. (2007). Ownership structure and corporate social responsibility disclosure: some Malaysian evidence. Corporate Governance: The international journal of business in society, 7(3), 251-266.

  • Monteiro, S. M. S., Aibar‐Guzmán, B. (2010). Determinants of environmental disclosure in the annual reports of large companies operating in Portugal. Corporate Social Responsibility and Environmental Management, 17(4), 185-204.

  • Naser, K., Al-Hussaini, A., Al-Kwari, D., and Nuseibeh, R. (2006). Determinants of corporate social disclosure in developing countries: The case of Qatar. Advances in International Accounting, 19, 1-23.

  • Oh, W. Y., Chang, Y. K., & Martynov, A. (2011). The effect of ownership structure on corporate social responsibility: empirical evidence from Korea. Journal of Business Ethics, 104(2), 283–297. doi:10.1007/s10551-011-0912-z

  • Prado-Lorenzo, J.-M., Garcia-Sanchez, I.-M. (2010). The role of the board of directors in disseminating relevant information on greenhouse gases. Journal of Business Ethics 97(3), 391–424.

  • Prior, D., Surroca, J., & Tribo, J.A. (2008). Are socially responsible managers really ethical? Exploring the relationship between earnings management and corporate social responsibility. Corporate Governance: An International Review, 16(3), 160-177. DOI: 10.1111/j.1467-8683.2008.00678.x

  • PWC. (2016). Investors, corporates, and ESG, Bridging the Gap, accessed on October, 15th 2018 from

  • Rao, K., Tilt, C. (2016a). Board composition and corporate social responsibility: The role of diversity, gender, strategy, and decision making. Journal of Business Ethics 138(2), 327–347.

  • Rao, K., Tilt, C. (2016b). Board diversity and CSR reporting: an Australian study. Meditari Accountancy Research 24(2), 182–210.

  • Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of Accounting and Economics, 42(3), 335-370.

  • Said, R., Hj Zainuddin, Y., & Haron H. (2009). The relationship between corporate social responsibility disclosure and corporate governance characteristics in Malaysian Public Listed companies. Social Responsibility Journal, 5(2), 212-226.

  • Setiawan, A. (2016). Integrated reporting: are Indonesian companies ready to do it? Asian Journal of Accounting Research, 1(2), 62-70.

  • Suchman, M. C. (1995). Managing legitimacy: strategic and institutional approaches. Academy of Management, 20(3), 571-610.

  • Sur, S., Lvina, E., & Magnan, M. (2013). Why do boards differ? Because owners do: assessing ownership impact on board composition. Corporate Governance: An International Review, 21(4), 373–389.

  • Suwaidan, M. S., Al-Omari, A. M. D., and Haddad, R. H. (2004). Social responsibility disclosure and corporate characteristics: the case of Jordanian industrial companies. International Journal of Accounting, Auditing and Performance Evaluation, 1(4), 432-447. doi: 10.1504/IJAAPE.2004.006355

  • Tagesson, T., Blank, V., Broberg, P., & Collin, S.-O. (2009). What explains the extent and content of social and environmental disclosures on corporate websites: a study of social and environmental reporting in Swedish listed corporations. Corporate Social Responsibility and Environmental Management, 16(6), 352–364. doi:10.1002/csr.194.

  • Tamimi, N. and Sebastianelli, R. (2017). Transparency among S&P 500 companies: an analysis of ESG disclosure scores. Management Decision, 55(8), 1660-1680.

  • Tencati, A., Perrini, F. and Pogutz, S. (2004). New tools to foster corporate socially responsible behavior. Journal of Business Ethics, 53(1/2), 173-190.

  • Thomsen, S., & Pedersen, T. (2000). Ownership structure and economic performance in the largest european companies. Strategic Management Journal, 21(6), 689–705.;2-Y

  • Wang, K., Sewon, O., & Claiborne, M. C. (2008). Determinants and consequences of voluntary disclosure in an emerging market: Evidence from China. Journal of International Accounting, Auditing, and Taxation, 17(1), 14-30.

  • Zang, A. Y. (2012). Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The Accounting Review, 87(2), 675-703.

  • Zhang, J., & Swanson, D. (2006). Analysis of news media’s representation of corporate social responsibility (CSR). Public Relations Quarterly, 51(2), 13-17.

bottom of page