Moderated Mediation in Earnings Management and Firm Value: Examining the Roles of CSR Disclosure and Accounting Conservatism
https://doi.org/10.26794/2587-5671-2026-30-5-1977-01
Abstract
This study examines the relationship between earnings management and firm value, emphasizing the mediating role of corporate social responsibility (CSR) disclosure and the moderating effect of accounting conservatism. Using a sample of 731 non-financial companies listed on the Indonesia Stock Exchange from 2016 to 2023, with 5,848 firm-year observations, the research employs panel regression and conditional process modelling to test moderated mediation effects. The findings reveal that earnings management negatively impacts firm value, as profit manipulation erodes investor confidence and diminishes the reliability of financial statements. CSR disclosure fully mediates this relationship by mitigating the adverse effects of earnings management, signalling the firm’s commitment to social responsibility, and enhancing stakeholder trust. Furthermore, accounting conservatism moderates these relationships by weakening the negative association between earnings management and firm value while strengthening the positive effect of CSR disclosure on firm value. These results highlight the strategic importance of combining CSR disclosure and conservative accounting practices as governance mechanisms to bolster investor confidence and stabilize firm value.
Supporting agencies: This research was funded by the Research and Community Service Institute (Lembaga Penelitian dan Pengabdian kepada Masyarakat), Universitas Muhammadiyah Semarang, under Contract No. 0092/UNIMUS.L/PG-LN/PJ.INT/2024. The authors acknowledge with gratitude the financial support received.
About the Authors
N. Nurcahyono
Universitas Muhammadiyah Semarang
Indonesia
Competing Interests:
Indonesia
Nurcahyono Nurcahyono — PhD (Cand.), M.S.A., Department of Accounting
Semarang City, Central Java, Indonesia
Competing Interests:
The authors have no conflicts of interest to declare.
F. Sukesti
Universitas Muhammadiyah Semarang
Indonesia
Competing Interests:
Indonesia
Fatmasari Sukesti — PhD, M. Sci, Department of Accounting
Semarang City, Central Java, Indonesia
Competing Interests:
The authors have no conflicts of interest to declare.
Z. Abdullah
Universiti Malaysia Klantan
Malaysia
Competing Interests:
Malaysia
Zailani Abdullah — PhD, Prof., Faculty of Entrepreneurship and Business
Bachok, Pengkalan Chepa, Jeli, Kelantan, Malaysia
Competing Interests:
The authors have no conflicts of interest to declare.
A.P.R.Z. Putri
Universitas Muhammadiyah Semarang
Indonesia
Competing Interests:
Indonesia
Anindya Prasisca Rena Zhetira Putri — PhD (Cand.), M.S.A., Department of Accounting
Semarang City, Central Java, Indonesia
Competing Interests:
The authors have no conflicts of interest to declare.
References
1. Alsulami F., Chafai A. The curvilinear relationship between governance structure and nonfinancial risk disclosure in Saudi Arabian firms: Do ethical values matter? Journal of Financial Reporting and Accounting. 2024. DOI: 10.1108/JFRA-10–2023–0615
2. Vatis S. E., Nerantzidis M., Drogalas G., Chytis E. Connecting IFRS and earnings management: A bibliometric analysis. Journal of Accounting Literature. 2025;47(1):51–74. DOI: 10.1108/jal-02–2023–0036
3. Lam K. C.K., Sami H., Yao J., Yao Y. Mandatory IFRS adoption and earnings management: The role of culture. Journal of International Accounting, Auditing and Taxation. 2023;50:100527. DOI: 10.1016/j.intaccaudtax.2023.100527
4. Mnif Y., Slimi I. How do auditor attributes affect bank earnings management? Evidence from Africa. Journal of Accounting in Emerging Economies. 2024;14(4):819–854. DOI: 10.1108/JAEE-09–2022–0255
5. Jansen M. C., Meckling W. H. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics. 1976;3(4):305–360. DOI: 10.1016/0304–405X(76)90026-X
6. Al-Shattarat B., Hussainey K., Al-Shattarat W. The impact of abnormal real earnings management to meet earnings benchmarks on future operating performance. International Review of Financial Analysis. 2022;81:101264. DOI: 10.1016/j.irfa.2018.10.001
7. Hussain A., Akbar M., Khan M. K., Sokolová M., Akbar A. The interplay of leverage, financing constraints and real earnings management: A panel data approach. Risks. 2022;10(6):110. DOI: 10.3390/risks10060110
8. Pathak R., Das Gupta R. Environmental, social and governance performance and earnings management — the moderating role of law code and creditor’s rights. Finance Research Letters. 2022;47A:102849. DOI: 10.1016/j.frl.2022.102849
9. Gavana G., Gottardo P., Moisello A. M. Related party transactions and earnings management: The moderating effect of ESG performance. Sustainability. 2022;14(10):5823. DOI: 10.3390/su14105823
10. Li Y., Li X., Xiang E., Djajadikerta H. G. Financial distress, internal control, and earnings management: Evidence from China. Journal of Contemporary Accounting & Economics. 2020;16(3):100210. DOI: 10.1016/j.jcae.2020.100210
11. Mohd Sofian F. N.R., Muhamad R. Modified integrated Islamic CSRD index and financial performance of Malaysian Islamic banks: Stakeholders’ perception. Journal of Islamic Accounting and Business Research. 2020;11(8):1599–1617. DOI: 10.1108/JIABR-10–2018–0158
12. Kharadi R. R., Sundin G. W. CsrD regulates amylovoran biosynthesis and virulence in Erwinia amylovora in a novel cyclic-di-GMP dependent manner. Molecular Plant Pathology. 2022;23(8):1154–1169. DOI: 10.1111/mpp.13217
13. Kuo Y.-F., Lin Y.-M., Chien H.-F. Corporate social responsibility, enterprise risk management, and real earnings management: Evidence from managerial confidence. Finance Research Letters. 2021;41:101805. DOI: 10.1016/j.frl.2020.101805
14. Nurcahyono N., Sinarasri A. Earnings management as an finance strategy for company image. Jurnal Proaksi. 2023;10(3):337351. DOI: 10.32534/jpk.v10i3.4476
15. Al-Absy M.S.M., Ku Ismail K. N.I., Chandren S. Audit committee chairman characteristics and earnings management: The influence of family chairman. Asia-Pacific Journal of Business Administration. 2019;11(4):339–370. DOI: 10.1108/APJBA-10–2018–0188
16. Proença C., Augusto M., Murteira J. The effect of earnings management on bank efficiency: Evidence from ECB-supervised banks. Finance Research Letters. 2023;51:103450. DOI: 10.1016/j.frl.2022.103450
17. Bouaziz S. S., Fakhfakh I. B.A., Jarboui A. Shareholder activism, earnings management and Market performance consequences: French case. International Journal of Law and Management. 2020;62(5):395–415. DOI: 10.1108/IJLMA-03–2018–0050
18. Ardekani A. M., Younesi N., Hashemijoo M. Acquisition, earnings management and firm’s performance: Evidence from Malaysia. Journal of Business Studies Quarterly. 2012;4(1):91–110. URL: https://www.researchgate.net/publication/230807191_Acquisition_Earnings_Management_and_Firm’s_Performance_Evidence_from_Malaysia
19. Chakroun S., Ben Amar A, Ben Amar A. Earnings management, financial performance and the moderating effect of corporate social responsibility: Evidence from France. Management Research Review. 2022;45(3):331–362. DOI: 10.1108/MRR-02–2021–0126
20. Ibrani E. Y., Faisal F., Handayani Y. D. Determinant of non-GAAP earnings management practices and its impact on firm value. Cogent Business and Management. 2019;6(1):1666642. DOI: 10.1080/23311975.2019.1666642
21. Intara P., Sangwichitr K., Sattayarak O.-A. Earnings quality and firm value: Does corporate governance matter? Cogent Business and Management. 2024;11(1):2386158. DOI: 10.1080/23311975.2024.2386158
22. Francis B., Hasan I., Park J. C., Wu Q. Gender differences in financial reporting decision making: Evidence from accounting conservatism. Contemporary Accounting Research. 2015;32(3):1285–1318. DOI: 10.1111/1911–3846.12098
23. Anagnostopoulou S. C., Tsekrekos A. E., Voulgaris G. Accounting conservatism and corporate social responsibility. The British Accounting Review. 2021;53(4):100942. DOI: 10.1016/j.bar.2020.100942
24. Guo J., Huang P., Zhang Y. Accounting conservatism and corporate social responsibility. Advances in Accounting. 2020;51:100501. DOI: 10.1016/j.adiac.2020.100501
25. Salehi M., Ghanbari E., S. Orfizadeh S. The relationship between managerial entrenchment and accounting conservatism. Journal of Facilities Management. 2021;19(5):612–631. DOI: 10.1108/JFM-11–2020–0087
26. Boulhaga M., Elbardan H., Elmassri M. The effect of internal control and corporate social responsibility on conditional accounting conservatism: Evidence from France. The Journal of Corporate Accounting and Finance. 2023;34(2):228–241. DOI: 10.1002/jcaf.22605
27. Bouaziz S. S., Fakhfakh I. B.A., Jarboui A. Shareholder activism, earnings management and Market performance consequences: French case. International Journal of Law and Management. 2020;62(5):395–415. DOI: 10.1108/IJLMA-03–2018–0050
28. Alqatan A., Hichri A. CSR practices and earnings management: the mediating effect of accounting conservatism and the moderating effect of corporate governance: Evidence from Finnish companies. Competitiveness Review. 2025;35(1)32–52. DOI: 10.1108/CR-10–2023–0253
29. Clarkson P., Li Y., Richardson G., Tsang A. Causes and consequences of voluntary assurance of CSR reports: International evidence involving Dow Jones Sustainability Index Inclusion and Firm Valuation. Accounting, Auditing and Accountability Journal. 2019;32(8):2451–2474. DOI: 10.1108/AAAJ-03–2018–3424
30. Roy P. P., Rao S., Zhu M. Mandatory CSR expenditure and stock market liquidity. Journal of Corporate Finance. 2022;72:102158. DOI: 10.1016/j.jcorpfin.2022.102158
31. Song D., Deng Z., Wang B. Are companies better off with AI? The effect of AI service failure events on firm value. Industrial Management and Data Systems. 2025;125(2):504–534. DOI: 10.1108/IMDS-02–2024–0076
32. Khalifaturofi’ah S.O., Setiawan R. Profitability’s impact on firm value in Indonesia’s real estate firms: A panel data investigation. Property Management. 2025;43(2):169–186. DOI: 10.1108/PM-08–2023–0082
33. Jones J. J. Earnings management during import relief investigations. Journal of Accounting Research. 1991;29(2):193–228. DOI: 10.2307/2491047
34. Dechow P. M., Sloan R. G., Sweeney A. P. Detecting earnings management. The Accounting Review. 1995;70(2):193–225. URL: http://sseriga.free.fr/course/uploads/FA%20-%20PM/Dechow_et_al_1995.pdf
35. Biswas S., Bhattacharya S. N., Jin J. Y., Bhattacharya M., Sadarangani P. H. Loan loss provisions and income smoothing in banks: The role of trade openness and IFRS in BRICS. China Accounting and Finance Review. 2024;26(1):76–101. DOI: 10.1108/cafr-03–2023–0037
36. Cho D. J., Chung C. Y., Young J. Study on the relationship between CSR and financial performance. Sustainability. 2019;11(2):343. DOI: 10.3390/su11020343
37. Bae K.-H., El Ghoul S., Gong Z., Guedhami O. Does CSR matter in times of crisis? Evidence from the COVID-19 pandemic. Journal of Corporate Finance. 2021;67:101876. DOI: 10.1016/j.jcorpfi n.2020.101876
38. He W., Shi X., Chang Y., Wu W. Pay disparity within top management teams, real earnings management, and firm value: Destructive competition or value creation? A moderated mediating model. Applied Economics Letters. 2022;29(5):384–390. DOI: 10.1080/13504851.2020.1869156
39. Merzki N., Ben Rejeb M. Bank diversifi cation and earnings management: The moderating effect of female directors. Review of Accounting and Finance. 2023;22(4):425–448. DOI: 10.1108/RAF-08–2022–0223
40. Mangala D., Dhanda M. Earnings management and listing day performance of IPOs in India. Journal of Accounting in Emerging Economies. 2022;12(5):812–839. DOI: 10.1108/JAEE-01–2021–0032
41. Price J. M., Sun W. Doing good and doing bad: The impact of corporate social responsibility and irresponsibility on firm performance. Journal of Business Research. 2017;80:82–97. DOI: 10.1016/j.jbusres.2017.07.007
42. Wati L. N., Pirzada K., Ramdany, Momon. Determinants of accounting conservatism in politically connected firms. Journal of Security and Sustainability Issues. 2020;10(1):189–201. DOI: 10.9770/jssi.2020.10.1(14)
43. Shahzad F., Baig M. H., Rehman I. U., Saeed A., Asim G. A. Does intellectual capital effi ciency explain corporate social responsibility engagement-fi rm performance relationship? Evidence from environmental, social and governance performance of US listed fi rms. Borsa Istanbul Review. 2022;22(2):295–305. DOI: 10.1016/j.bir.2021.05.003
44. Shira R. K. Corporate governance, competition and earnings management: Evidence from Asian emerging economies. Journal of Financial Reporting and Accounting. 2025;23(1):218–234. DOI: 10.1108/JFRA-07–2022–0270
45. Nagy M., Valaskova K., Durana P. The effect of CSR policy on earnings management behavior: Evidence from Visegrad publicly listed enterprises. Risks. 2022;10(11):203. DOI: 10.3390/risks10110203
Review
For citations:
Nurcahyono N., Sukesti F., Abdullah Z., Putri A. Moderated Mediation in Earnings Management and Firm Value: Examining the Roles of CSR Disclosure and Accounting Conservatism. Finance: Theory and Practice. https://doi.org/10.26794/2587-5671-2026-30-5-1977-01
Views:
19
Email this article 