Environmental, social, and governance (ESG) disclosure, earnings management and cash holdings: Evidence from a European context

IF 4.8 Q1 Economics, Econometrics and Finance

Business Ethics-A European Review Pub Date : 2023-12-26 DOI:10.1111/beer.12650

Isam Saleh, Malik Abu Afifa, Abdallah Alkhawaja

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Abstract

The primary objective of this research is to examine the potential influence of environmental, social, and governance (ESG) disclosure on cash holdings. Additionally, the study explores the role of earnings management (EM) practices as a mediating factor in this relationship. The sample comprises 797 companies listed on financial markets across 19 European countries, and the data spans from 2013 to 2019. The outcomes indicate a significant negative correlation between ESG disclosure and cash holdings, implying that ESG performance can be used by management to resolve disputes with stakeholders. The outcomes further indicate that the existence of EM practices partially mediates the link between ESG disclosure and cash holdings. Moreover, they are robust by substitute cash holdings specification, three distinct initiatives of ESG disclosure (i.e., environment, social, and governance), and a two-stage least squares assessment. Therefore, the findings document that nonfinancial reporting in the form of ESG disclosure can assist in controlling agency conflict, leading to better valuations of company performance by stakeholders.

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环境、社会和治理（ESG）信息披露、盈利管理和现金持有：欧洲背景下的证据

本研究的主要目的是探讨环境、社会和治理（ESG）信息披露对现金持有量的潜在影响。此外，本研究还探讨了收益管理（EM）实践在这一关系中的中介作用。样本包括 19 个欧洲国家金融市场上的 797 家上市公司，数据时间跨度为 2013 年至 2019 年。研究结果表明，环境、社会和治理信息披露与现金持有之间存在明显的负相关关系，这意味着管理层可以利用环境、社会和治理绩效来解决与利益相关者之间的纠纷。研究结果进一步表明，环境、社会和公司治理实践的存在部分调节了环境、社会和公司治理信息披露与现金持有之间的联系。此外，替代现金持有量规范、三项不同的 ESG 披露举措（即环境、社会和治理）以及两阶段最小二乘法评估也证明了这些结果的稳健性。因此，研究结果表明，以环境、社会和治理披露为形式的非财务报告有助于控制代理冲突，从而使利益相关者对公司业绩做出更好的评价。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Business Ethics-A European Review Multiple-

CiteScore

5.90

自引率

0.00%

发文量

期刊介绍： -To offer rigorous and informed analysis of ethical issues and perspectives relevant to organizations and their relationships with society -To promote scholarly research and advance knowledge in relation to business ethics and corporate social responsibility and social entrepreneurship by providing cutting edge theoretical and empirical analysis of salient issues and developments -To be responsive to changing concerns and emerging issues in the business ethics and business and society sphere, and to seek to reflect these in the balance of contributions -To be the publication outlet of choice for all types of original research relating to business ethics and business-society relationships. Original articles are welcomed. Each issue will normally contain several major articles, and there will be an occasional FOCUS section which will contain articles on an issue of particular importance and topicality. Other regular features will include editorial interviews, book reviews, comments and responses to published articles, research notes and case studies. Business Ethics: A European Review is well established as an academic research journal which is at the same time readable, user-friendly and authoritative. It publishes both fully refereed scholarly papers and special contributions such as speeches and reviews. The range of contributions reflects the variety and scope of ethical issues faced by business and other organisations world-wide, and at the same time seeks to address the interests and concerns of the journals readership.