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<p>This study investigates the relationship between environmental, social, and governance (ESG) scores and potential tendencies to manipulate the earnings of telecommunication companies. We assumed a negative relationship between ESG scores and earnings management since the companies with higher ESG are more responsible and expected to prevent manipulation. We used ESG scores from Refinitiv as sustainability measures and discretionary accruals as the indicator of earnings management. We constructed models assuming a bilateral relationship between ESG and earnings. The results reveal that companies with higher environmental scores have higher dispersion from normal accruals; this may result for two reasons in our anticipation: they may record more accruals depending on environmental regulations and may use environmental scores to make up their earnings. Social and governance scores have a negative impact on discretionary accruals, which are insignificant. Hence companies with higher social responsiveness and strong governance produce reliable financial information.</p>
</abstract>

This study investigates the relationship between environmental, social, and governance (ESG) scores and potential tendencies to manipulate the earnings of telecommunication companies. We assumed a negative relationship between ESG scores and earnings management since the companies with higher ESG are more responsible and expected to prevent manipulation. We used ESG scores from Refinitiv as sustainability measures and discretionary accruals as the indicator of earnings management. We constructed models assuming a bilateral relationship between ESG and earnings. The results reveal that companies with higher environmental scores have higher dispersion from normal accruals; this may result for two reasons in our anticipation: they may record more accruals depending on environmental regulations and may use environmental scores to make up their earnings. Social and governance scores have a negative impact on discretionary accruals, which are insignificant. Hence companies with higher social responsiveness and strong governance produce reliable financial information.

Environmental, social, and governance scores and earnings management in telecommunication companies: An international perspective

Financial Internet Quarterly

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

This study investigates the relationship between environmental, social, and governance (ESG) scores and potential tendencies to manipulate the earnings of...

Environmental, social, and governance scores and earnings management in telecommunication companies: An international perspective

Publié en ligne: 10 juil. 2023

Pages: 26 - 35

Reçu: 21 févr. 2023

Accepté: 26 avr. 2023

DOI: https://doi.org/10.2478/fiqf-2023-0010

Mots clés
discretionary accruals, disclosures, earnings quality, ESG, telecommunication, sustainability

© 2023 Goksel Acar et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Environmental, social, and governance scores and earnings management in telecommunication companies: An international perspective

Publié en ligne: 10 juil. 2023

Pages: 26 - 35

Reçu: 21 févr. 2023

Accepté: 26 avr. 2023

DOI: https://doi.org/10.2478/fiqf-2023-0010

Mots clésdiscretionary accruals, disclosures, earnings quality, ESG, telecommunication, sustainability

© 2023 Goksel Acar et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Mots clés
discretionary accruals, disclosures, earnings quality, ESG, telecommunication, sustainability