Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures
The paper delves into the relationship between accounting conservatism, valued by financial stakeholders, and corporate social performance (CSP), esteemed by non-financial stakeholders. This study assesses the potential impact of financial reporting practices, specifically accounting conservatism, o...
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LLC "CPC "Business Perspectives"
2023-12-01
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| Series: | Investment Management & Financial Innovations |
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| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19346/IMFI_2023_04_Pasko.pdf |
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| author | Oleh Pasko Li Zhang Alvina Oriekhova Nataliia Gerasymenko Olena Polishchuk |
| author_facet | Oleh Pasko Li Zhang Alvina Oriekhova Nataliia Gerasymenko Olena Polishchuk |
| author_sort | Oleh Pasko |
| collection | DOAJ |
| description | The paper delves into the relationship between accounting conservatism, valued by financial stakeholders, and corporate social performance (CSP), esteemed by non-financial stakeholders. This study assesses the potential impact of financial reporting practices, specifically accounting conservatism, on a firm’s CSP activities, which has significant implications for diverse stakeholders. Employing an accrual-based proxy for accounting conservatism and the social contribution value per share from the Shanghai Stock Exchange as a proxy for CSP, the study utilizes a sample of 25,490 year-company observations of A-share listed companies on China’s Shanghai and Shenzhen stock exchanges spanning from 2008 to 2019. Empirical findings indicate a negative correlation between accounting conservatism and CSP. The study suggests that higher levels of social performance are associated with reduced conservatism in financial reporting, indicating that firms prioritize CSP over the interests of financial stakeholders by adopting less conservative financial reporting policies. Aligned with agency theory, these results underscore that socially responsible firms are less inclined to employ accounting conservatism in reporting earnings. This study establishes a connection between firms’ unconventional and less traditional activities, such as CSP, and conservative financial reporting, offering valuable insights for investors, analysts, and regulators.
AcknowledgmentThis paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “Embracing EU corporate social responsibility: challenges and opportunities of business-society bonds transformation in Ukraine” – 101094100 – EECORE – ERASMUS-JMO-2022-HEI-TCH-RSCH-UA-IBA / ERASMUS-JMO-2022-HEI-TCHRSCH https://eecore.snau.edu.ua/ |
| format | Article |
| id | doaj-art-6d22aef640dc419d9b03712e58305ba5 |
| institution | Kabale University |
| issn | 1810-4967 1812-9358 |
| language | English |
| publishDate | 2023-12-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Investment Management & Financial Innovations |
| spelling | doaj-art-6d22aef640dc419d9b03712e58305ba52025-02-03T11:02:35ZengLLC "CPC "Business Perspectives"Investment Management & Financial Innovations1810-49671812-93582023-12-0120443445110.21511/imfi.20(4).2023.3419346Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosuresOleh Pasko0https://orcid.org/0000-0002-6275-5885Li Zhang1https://orcid.org/0000-0002-4837-8630Alvina Oriekhova2https://orcid.org/0000-0003-1016-3287Nataliia Gerasymenko3https://orcid.org/0000-0001-9483-8952Olena Polishchuk4https://orcid.org/0000-0002-2903-1885Ph.D. in Economics, Associate Professor, Department of Accounting and Taxation, Sumy National Agrarian University, Ukraine; Fellow of the Kirkland Research program at University of Warsaw, PolandSenior Lecturer, Xinxiang Vocational and Technical College, China; Ph.D. Student, Department of Accounting and Taxation, Sumy National Agrarian University, UkraineDoctor of Economics, Professor, Head of the Department of Management named after Professor Mykhailova L. I., Sumy National Agrarian University, UkrainePh.D. in Economics, Associate Professor, Department of Global Economy, the National University of Life and Environmental Sciences of Ukraine,UkrainePh.D. in Economics, Associate Professor, Department of Accounting, Analysis and Audit, Vasyl’ Stus Donetsk National University, UkraineThe paper delves into the relationship between accounting conservatism, valued by financial stakeholders, and corporate social performance (CSP), esteemed by non-financial stakeholders. This study assesses the potential impact of financial reporting practices, specifically accounting conservatism, on a firm’s CSP activities, which has significant implications for diverse stakeholders. Employing an accrual-based proxy for accounting conservatism and the social contribution value per share from the Shanghai Stock Exchange as a proxy for CSP, the study utilizes a sample of 25,490 year-company observations of A-share listed companies on China’s Shanghai and Shenzhen stock exchanges spanning from 2008 to 2019. Empirical findings indicate a negative correlation between accounting conservatism and CSP. The study suggests that higher levels of social performance are associated with reduced conservatism in financial reporting, indicating that firms prioritize CSP over the interests of financial stakeholders by adopting less conservative financial reporting policies. Aligned with agency theory, these results underscore that socially responsible firms are less inclined to employ accounting conservatism in reporting earnings. This study establishes a connection between firms’ unconventional and less traditional activities, such as CSP, and conservative financial reporting, offering valuable insights for investors, analysts, and regulators. AcknowledgmentThis paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “Embracing EU corporate social responsibility: challenges and opportunities of business-society bonds transformation in Ukraine” – 101094100 – EECORE – ERASMUS-JMO-2022-HEI-TCH-RSCH-UA-IBA / ERASMUS-JMO-2022-HEI-TCHRSCH https://eecore.snau.edu.ua/https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19346/IMFI_2023_04_Pasko.pdfaccounting conservatismChinacorporate social performancecorporate social responsibilityearnings quality |
| spellingShingle | Oleh Pasko Li Zhang Alvina Oriekhova Nataliia Gerasymenko Olena Polishchuk Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures Investment Management & Financial Innovations accounting conservatism China corporate social performance corporate social responsibility earnings quality |
| title | Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures |
| title_full | Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures |
| title_fullStr | Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures |
| title_full_unstemmed | Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures |
| title_short | Solving the choice puzzle: Financial and non-financial stakeholders preferences in corporate disclosures |
| title_sort | solving the choice puzzle financial and non financial stakeholders preferences in corporate disclosures |
| topic | accounting conservatism China corporate social performance corporate social responsibility earnings quality |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/19346/IMFI_2023_04_Pasko.pdf |
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