دانلود رایگان مقاله انگلیسی مسئولیت اجتماعی شرکت، پذیرش شریعت و کیفیت درآمد - اشپرینگر 2017

Abstract

This study examines the effect of two potential sources of ethical principles on earnings quality: corporate social responsibility (CSR) and membership in a Shariah index. We define membership in a Shariah index as the adherence to an ethical code that relates to Islam. Our sample comprises firms in ten European Union countries for the period from 2003 to 2013. The empirical results show that firms with a high degree of CSR are less likely to manage earnings. In contrast, membership in a Shariah index leads to earnings manipulation. Our results are robust after using several alternative quality metrics for earnings. Furthermore, our empirical results indicate that highly rated CSR firms that are not Shariah-compliant are less likely to engage in earnings manipulation. Further, institutional factors are also important in determining the link between CSR, Shariah-compliance, and the quality of financial reporting.

6 Conclusion

This study examines the effect of two sources of ethical principles, CSR and membership in a Shariah index, on the quality of financial reporting. We expect that opportunistic behavior or moral obligation drives the firms’ engagement in ethical activities. Our empirical results show that firms engaging in CSR activities are less likely to manipulate earnings. These results are robust when using each main component of CSR as well as alternative earnings quality metrics. In contrast, membership in a Shariah index has the opposite effect on earnings quality. This finding indicates that membership does not play an important role in ensuring managers’ ethical behavior. This result supports the idea that the current Shariah screening process does not fully conform to the underlying Islamic principles and concentrates primarily on negative screening rather than social welfare and transparency.

Furthermore, the inclusion in a Shariah-compliant index plausibly results from firms satisfying the screening criteria rather than from a conscious decision to conduct business in a Shariah-compliant manner. Membership basically implies that the firms do not do anything prohibited under Shariah law. Another plausible explanation for the variance between the two ethical sources could be that CSR rating agencies provide comprehensive details regarding CSR information that is relevant to investors in assessing every aspect of the firms’ CSR performance. The Shariah screening process, in contrast, is less transparent in that the process provides only the final outcome without explaining in detail the aspects that affect the decision to include a firm in, or exclude it from, the index. This in turn limits investors’ ability to track the firm’s Shariah performance and to predict the possibility of its Shariah-compliance in the future.