• Register
  • Login
  • Persian

Financial Accounting Knowledge

  1. Home
  2. The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting

Current Issue

By Issue

By Author

By Subject

Author Index

Keyword Index

About Journal

Aims and Scope

Editorial Board

Publication Ethics

Indexing and Abstracting

Related Links

FAQ

Peer Review Process

Journal Metrics

News

Guide for Authors

Terms and Conditions

Forms

The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting

    Authors

    • Daruosh Foroghi 1
    • Narges Hamidian 2
    • Fateme Bahrami 3

    1 Associate Professor of Accounting, University of Isfahan, Isfahan, Iran.

    2 Assistant Professor of Accounting, University of Isfahan, Isfahan, Iran.

    3 M.A Student of Accounting, University of Isfahan, Isfahan, Iran

,

Document Type : Research Paper

10.30479/jfak.2022.16357.2933
  • Article Information
  • References
  • Download
  • How to cite
  • Statistics
  • Share

Abstract

Purpose: Fraud is a clever manipulation of financial statements by management that misleads users. The accounting literature shows that companies with higher social responsibility are less likely to engage in fraudulent activities. Therefore, the purpose of this study is to determine the effect of corporate social responsibility on fraudulent financial reporting in companies listed on the Tehran Stock Exchange.
Method: The statistical population of this research is the companies listed on the Tehran Stock Exchange. The required data has been extracted from Rahavard Novin database and Codal site. Based on the screening method, 165 companies in the period 1390 to 1398 have been selected. The logit regression was also used to test the research hypothesis.
Results: Findings show that social responsibility reporting has a negative effect on fraudulent financial reporting and as the corporate social responsibility score increases, the likelihood of fraudulent financial reporting decreases.
Conclusion: Based on the research results, it can be stated that socially responsible companies are more inclined to pursue ethical activities to achieve social welfare. So they have less incentive to engage in fraudulent activity. Social responsibility also increases the company's profitability. As a result, good profitability and lack of financial problems reduce the possibility of fraudulent activity.
Contribution: Providing evidence to reduce the likelihood of fraudulent reporting by increasing corporate social responsibility scores raises awareness of users of financial statements and legislatures and improves future economic decisions. The results of this study also expand the accounting literature in the field of fraud and social responsibility.

Keywords

  • Social Responsibility
  • Fraudulent Financial Reporting
  • Fraud
  • Financial Reporting
  • XML
  • PDF 1.49 M
  • RIS
  • EndNote
  • Mendeley
  • BibTeX
  • APA
  • MLA
  • HARVARD
  • CHICAGO
  • VANCOUVER
References
Adams, C. A. (2002). Internal Organizational Factors Influencing Corporate Social and Ethical Reporting: Beyond Current Theorizing.­ Accounting,"O Compensation Disclosure, UTS School of Accounting.
Adi, A. & Baridwan, Z. & Mardiati, E. (2018). Profitability, Liquidity, Leverage and Corporate Governance Impact on Financial Statement Fraud and Financial Distress as Intervening Variable. Bulletin of Taras Shevchenko National University of Kyiv Economics, 5, 66-74.
Ainul, W. & Wan, A. & Razali, M. & Arshad, R. (2014).  Disclosure of Corporate governance structure and the likelihood of fraudulent financial reporting. Procedia – Social and Behavioral Sciences, 145, 243–253.
Auditing Standards. (2005). Auditor Responsibility for Fraud and Error in Auditing Financial Statements, Section 240. (In Persian)
Chalaki, P., Ghaderi, B. (2016). Forensic accounting and its role in prevention and detection of fraud. Accounting and Auditing Studies, 4(16), 44-57. (In Persian)
Chih, H. L. & Shen, C. H. & Kang, F. C. (2008). Corporate Social Responsibility, Investor Protection, and Earnings Management: Some International Evidence. Journal of Business Ethics, 79, 179-198.
Christensen, D. M. (2016). Corporate Accountability Reporting and High-profile Misconduc. The Accounting Review, 91, 377-399.
Cressey, D. R. (1953). Other people’s money: A Study in the social psychology of embezzlement, Glencoe, Ill.: Free Press.
Del Bosco, B. & Misani, N. (2011). Keeping the Enemies Close: The Contribution of Corporate Social Responsibility to Reducing Crime against the Firm. Scandinavian Journal of Management, 27, 87-98.
Egbunike, C. F. & Ifeoma C. A. (2013). Fraud & Auditors Analytical Procedure: A Test of Benford’s Law. EBS Journal of Management Sciences, 1(1), 14-31.
Elliot, R. & Willingham, J. (1980). Management Fraud: Detection and Deterrence. Petrocelli, New York. N Y.
Esmaili Kia, G., Najafnia, S., Oshani, M. (2019). Investigating the Relationship between External Corporate Governance Mechanisms and Financial Fraud, Focusing on Cognitive Evaluation Theory Insights on Agency Theory Prescriptions. Accounting and Auditing Review, 26(2), 169-192. (In Persian)
Etemadi, H., abdoli, L. (2018). Audit Quality and Financial statement fraud. Financial Accounting Knowledge, 4(4), 23-43. (In Persian)
Faraji, O., Jannati Daryakenari, F., Mansouri, K., Younesi Moti, F. (2020). Corporate Social Responsibility and Firm Value: The Mediating Role of Earnings Management. Social Capital Management, 7(1), 25-58. (In Persian)
Farajzadeh Dehkordi, H., Aghaei, L. (2015). Dividend Policy and Fraudulent Financial Reporting. Empirical Studies in Financial Accounting, 12(45), 97-114. (In Persian)
Fen Kuo, YA. & Mien Lin, Yi, Fang, H. C. (2020). Corporate social responsibility, enterprise risk management, and real earnings management: Evidence from managerial confidence, Finance Research Letters, Journal Pre-proof.
Foroghi, D., amiri, H., javanmard, M. (2018). Impace of Corporate Social Responsibility to Cash Holdings through Synchronous Effect of Chosen Variables. Journal of Financial Accounting Research, 10(1), 19-36. (In Persian)
Garriga, E. & Mele, D. (2004). Corporate social Responsibility Theories: Mapping the Territory. Journal of Business Ethics, 53, 51-71.
Godos-Diez, J., & Fernandez-Gago, R. & Martinez-Campillo, A. (2011). How important are CEOs to CSR practices? An analysis of the mediating effect of the perceived role of ethics and social responsibility, Journal of Business Ethics, 98 (4), 531-548.
Harjoto, M. A. (2017). Corporate social responsibility and corporate fraud. Social Responsibility Journal, 13(4), 762-779.
Heydari Korzanganeh, Gh., Noravesh, I., Jafari, MH. (2017). Social responsibility and financial performance in companies listed on the Tehran Stock Exchange, Economic Journal, 17(3), 53-78. (In Persian)
Hosseini, S., Haghighat, S. (2017). The Relationship between Corporate Governance and Community Engagement in Listed Companies of Tehran Stock Exchange. Journal of accounting and social interests, 6(4), 103-128. (In Persian)
Hasas Yegane, Y., Sohrabi, H., Ghavasi, M. (2020). The relationship between social responsibility reporting and company value. Financial accounting and auditing research, 45, 1-20. (In Persian)
Hung, M. & Shi, J. & Wang, Y. (2013). The Effect of Mandatory CSR disclosure on Information Asymmetry: evidence from a Quasi-natural Experiment in China. The Hong Kong University of Science and Technology, Working Paper.
Johnson, HH. (2003). Does it pay to be good? Social responsibility and financial performance, Business Horizons, 46(6), 34-40.
Jones, T.M., (1995), Instrumental stakeholder theory: A synthesis of ethical and economics, Academy of Management Review, 20(2), 404-437.
Karshenasan, A., bahraminasab, A., mamashli, R. (2019). The Effect of Financial Crisis on The probability of Fraudulent Reporting and Stocks Value. Financial Accounting Knowledge, 5(4), 145-168. (In Persian)
Khajavi, Sh., Mansori, Sh. (2015). Hidden loop fraud in the financial chain of security reporting. Certified Public Accountant Journal, 28, 54-64. (In Persian)
Khajavi, Sh., Ebrahimi, M. (2018). Investigating the Impact of Corporate Governance Mechanisms on Financial Statements Fraud of the Listed Companies in Tehran Stock Exchange. Asset Management and Financing, 6(2), 71-84. (In Persian)
Khaki. GH. (2007). Research Method in Management. Tehran. Scientific Publishing Center of Islamic Azad University. (In Persian)
Kordestani, G., Ghaderzadeh, S., Haghighat, H. (2018). Impact of social responsibility disclosure on accounting, economic and market based Measures Of corporate performance evaluation. Journal of Accounting Advances, 10(1), 187-217. (In Persian)
Lee, T.W. & Mitchell, T.R.  (1994). an alternative approach: the unfolding model of employee turnover, Academy of Management Review, 19(1), 51-89.
Liao, L. & Guanring, C. & Dengin, Z. (2019). Corporate Social Responsibility and Financial fraud: Evidence from China. Accounting and Finance, 59(5), 3133-3169.
Liao, J. & Smith, D. & Liu, X. (2019). Female CFOs and accounting fraud: Evidence from China. Pacfin, Pacific Basin Finance Journal, 53(C), 449-463.
McKinley, A. (2008). The Drivers and Performance of Corporate Environmental and Social Responsibility in the Canadian Mining Industry. (Master thesis, University of Toronto).
Mishra, D. R. & Sadol, E .G. & Omran, G. & Chuk, C. Y. & Kwok. (2011). Does Corporate Social Responsibility Affect the Cost of Capital? Journal of Banking & Finance, 35(9), 2388-2406.
Mohd, N, J. & Ahmad, N. & Mohd, S. N. (2010). Fraudulent financial reporting and company characteristics: tax audit evidence. Journal of Financial Reporting and Accounting, 8(2), 128-142.
Moshabaki, A., Shojaei, V.kh. (2009). Investigating the Relationship between Organization Culture and Corporate Social Responsibility. Applied Sociology, 21(4), 37-56. (In Persian)
Namazi, M., Moghimi, F. (2018). Effects of Innovations and Moderating Role of Corporate Social Responsibility on the Financial Performance of the Firms Listed on the Tehran Stock Exchange in Different Industries. Accounting and Auditing Review, 25(2), 289-310. (In Persian)
Nazaripour, M., Maghsodpour, S. (2020). Influence of Political Connections on the Relationship between Management Ability and Fraudulent Financial Reporting. Journal of Knowledge Accounting, 11(2), 169-207. (In Persian)
Okike, E. (2011). Theory and practice of corporate social responsibility. 1st edition, Springer Berlin Heidelberg.
Perols, J. L. & Lougee, B. A. (2011). The relation between earnings management and financial statement fraud. Advances in Accounting, 27(1), 39 - 53.
Porter, M.E. & Kramer, M.R. (2006). Strategy and Society: The Link between Competitive Advantage and Corporate Social Responsibility, Harvard Business Review, 84(2), 78-92.
Qaderi, K., Ghaderi, K. (2017). The Analysis of the Executive Overconfidence in Fraudulent Companies. Accounting and Auditing Review, 24(2), 243-262. (In Persian)
Rahimian, N. (2011). Discover fraud. Certified Public Accountant Journal, 8(13), 82-91. (In Persian)
Rodgers, W.A. & Soderbom, A. & Guiral. (2015). Corporate social Responsibility enhanced control system reducing the likelihood of fraud. Journal of Business Ethics, 131, 871-882.
Shi, W. & Brian, L. & Connelly, & Robert, E. H. (2017). External corporate governance and financial fraud: cognitive evaluation theory insights on agency theory prescriptions. Strategic Management Journal, 38, 1268–1286.
Vakilifard, H., Jabarzadekangarlooi, S., Soltan ahmadi, A. (2008). Investigate the characteristics of fraud in financial statements. Accountant, 24(210), 36-41. (In Persian)
Velury, V. & Jenkins, S. D. (2006).  Institutional Ownership and the quality of earnings. Journal of Business Research, 59(9), 1043-1051.
Zheng, Q. & Luo, Y. & Wang, S.L. (2014). Moral degradation, business ethics, and corporate social responsibility in a transitional economy. Journal of Business Ethics, 120(3), 405-421.
 
    • Article View: 1,453
    • PDF Download: 1,029
Financial Accounting Knowledge
Volume 9, Issue 1 - Serial Number 32
April 2022
Pages 1-27
Files
  • XML
  • PDF 1.49 M
Share
How to cite
  • RIS
  • EndNote
  • Mendeley
  • BibTeX
  • APA
  • MLA
  • HARVARD
  • CHICAGO
  • VANCOUVER
Statistics
  • Article View: 1,453
  • PDF Download: 1,029

APA

Foroghi, D. , Hamidian, N. and Bahrami, F. (2022). The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting. Financial Accounting Knowledge, 9(1), 1-27. doi: 10.30479/jfak.2022.16357.2933

MLA

Foroghi, D. , , Hamidian, N. , and Bahrami, F. . "The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting", Financial Accounting Knowledge, 9, 1, 2022, 1-27. doi: 10.30479/jfak.2022.16357.2933

HARVARD

Foroghi, D., Hamidian, N., Bahrami, F. (2022). 'The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting', Financial Accounting Knowledge, 9(1), pp. 1-27. doi: 10.30479/jfak.2022.16357.2933

CHICAGO

D. Foroghi , N. Hamidian and F. Bahrami, "The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting," Financial Accounting Knowledge, 9 1 (2022): 1-27, doi: 10.30479/jfak.2022.16357.2933

VANCOUVER

Foroghi, D., Hamidian, N., Bahrami, F. The Effect of Corporate Social Responsibility on Fraudulent Financial Reporting. Financial Accounting Knowledge, 2022; 9(1): 1-27. doi: 10.30479/jfak.2022.16357.2933

  • Home
  • About Journal
  • Editorial Board
  • Submit Manuscript
  • Contact Us
  • Sitemap

News

Financial Accounting Knowledge, is licensed under a Creative Commons Attribution 4.0 International License (CC BY NC) .

 

Newsletter Subscription

Subscribe to the journal newsletter and receive the latest news and updates

© Journal Management System. Powered by Sinaweb