CSR Engagement and Earnings Quality in Banks. The Moderating Role of Institutional Factors

Journal ar
Corporate Social Responsibility and Environmental Management
  • Volumen: 24
  • Número: 2
  • Fecha: 01 March 2017
  • Páginas: 145-158
  • ISSN: 15353966 15353958
  • Source Type: Journal
  • DOI: 10.1002/csr.1405
  • Document Type: Article
  • Publisher: John Wiley and Sons LtdSouthern GateChichester, West SussexPO19 8SQ
Copyright © 2017 John Wiley & Sons, Ltd and ERP EnvironmentOur main objective is to study whether banks that follow CSR practices enhance earnings quality. We also analyse whether differences in earnings quality that are driven by CSR engagement are affected in a complementary or substitutive manner by levels of investor protection and bank regulation for financial institutions across countries. To test our predictions, we use a sample of 877 observations, corresponding to 159 banks from 9 countries, for the period 2004¿2010. Our results indicate that a bank's commitment to CSR practices enhances earnings persistence as well as cash flow predictability. The empirical evidence also shows that the effect of CSR on the quality of bank earnings is particularly high in countries with higher levels of investor protection and bank regulation, providing evidence that these institutional factors are complementary mechanisms for CSR activities in banks, and suggesting that more socially responsible banks have higher earnings quality in a stricter regulatory environment. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment.

Author keywords

    Indexed keywords

      Funding details