Environmental performance, carbon performance and earnings management: Empirical evidence for the European capital market
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Environmental performance, carbon performance and earnings management : Empirical evidence for the European capital market. / Velte, Patrick.
In: Corporate Social Responsibility and Environmental Management, Vol. 28, No. 1, 01.01.2021, p. 42-53.Research output: Journal contributions › Journal articles › Research › peer-review
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TY - JOUR
T1 - Environmental performance, carbon performance and earnings management
T2 - Empirical evidence for the European capital market
AU - Velte, Patrick
N1 - Publisher Copyright: © 2020 The Author. Corporate Social Responsibility and Environmental Management published by ERP Environment and John Wiley & Sons Ltd.
PY - 2021/1/1
Y1 - 2021/1/1
N2 - The purpose of this study is to examine the relationship between environmental performance, carbon performance and earnings management. This analysis includes panel regressions as empirical-quantitative (archival) research methods and looks at the 2014–2018 financial years of companies listed on the STOXX Europe 600 (1,509 firm-year observations). Environmental (carbon) performance proxies are included as independent variables, and with two earnings quality measures, accrual-based earnings management (ACC) and real earnings management (REM) as dependent variables. Our findings align with prior research on sustainability performance and indicate that environmental (carbon) performance reduces ACC but increases REM. After including Granger causality tests, we find no indications of a bidirectional relationship. This analysis makes a key contribution to prior studies as this appears to be the first on the relationship between environmental (carbon) performance and earnings management in the European capital market. The study has major implications for business practice, regulators and research. Managers might use environmental and carbon strategies for greenwashing policies as this change in earnings management can be hardly detected by other stakeholders.
AB - The purpose of this study is to examine the relationship between environmental performance, carbon performance and earnings management. This analysis includes panel regressions as empirical-quantitative (archival) research methods and looks at the 2014–2018 financial years of companies listed on the STOXX Europe 600 (1,509 firm-year observations). Environmental (carbon) performance proxies are included as independent variables, and with two earnings quality measures, accrual-based earnings management (ACC) and real earnings management (REM) as dependent variables. Our findings align with prior research on sustainability performance and indicate that environmental (carbon) performance reduces ACC but increases REM. After including Granger causality tests, we find no indications of a bidirectional relationship. This analysis makes a key contribution to prior studies as this appears to be the first on the relationship between environmental (carbon) performance and earnings management in the European capital market. The study has major implications for business practice, regulators and research. Managers might use environmental and carbon strategies for greenwashing policies as this change in earnings management can be hardly detected by other stakeholders.
KW - Management studies
KW - Carbon performance
KW - corporate governance
KW - earnings management
KW - earnings quality
KW - environmental performance
KW - Sustainability Science
UR - http://www.scopus.com/inward/record.url?scp=85090457941&partnerID=8YFLogxK
UR - https://www.mendeley.com/catalogue/43255aa8-dada-3b39-8686-6a62b92923a9/
U2 - 10.1002/csr.2030
DO - 10.1002/csr.2030
M3 - Journal articles
VL - 28
SP - 42
EP - 53
JO - Corporate Social Responsibility and Environmental Management
JF - Corporate Social Responsibility and Environmental Management
SN - 1535-3958
IS - 1
ER -