Is financial reporting quality related to corporate social responsability practices? Evidence from family firms
Jennifer Martinez-Ferrero, Lázaro Rodriguez-Ariza and Beatriz Cuadrado-Ballesteros
The aim of this research is to highlight the relationship between financial reporting quality and corporate social responsibility (CSR) on the family firm sphere. Using a database of 1275 companies for the period 2002–2010 and the GMM estimator of Arellano and Bond (1991) for panel data, our results show that those companies that report high-quality financial statements promote more CSR practices. However, this relationship is weaker in family firms which support the existence of an entrenchment effect that associates greater family ownership with poor-quality information. We argue that family firms differ from non-family regarding the effect of financial reporting quality on the level of CSR practices.
- Financial reporting quality (FRQ)
- Earnings quality
- Corporate social responsibility (CSR)
- Family business