What is it about?
We find that ESG rating and real earnings management are negatively correlated, which indicates that the improvement of ESG rating will help to improve the level of corporate governance, standardize the business activities of enterprises, and thus help to reduce the real earnings management of enterprises. Our findings still hold after controlling for potential endogeneity and robustness issues. Further analysis shows that the internal and external oversight of companies further strengthens the negative relationship between ESG ratings and true earnings management
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Why is it important?
This paper provides important policy and practice implications for the special institutional background of China's transitional economies and other emerging market economies on how to reduce real earnings management, that is, we try to find an effective alternative mechanism to improve the quality of enterprise information disclosure.
Perspectives
The impact mechanism of ESG rating on real earnings management revealed by us has clear policy implications for how managers can improve the quality of information disclosure in emerging markets
Dean Keping Wu
chaohu university
Read the Original
This page is a summary of: Does ESG Rating Affect the Real Earnings Management of Enterprises - Based on Empirical Evidence of Chinese Listed Companies, SSRN Electronic Journal, January 2023, Elsevier,
DOI: 10.2139/ssrn.4324175.
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