The Impact of Environmental, Social, and Governance (ESG) Disclosures on Accounting Earnings Management: An Applied Study | ||
| مجلة البحوث المالية والتجارية | ||
| Volume 26, Issue 4 - Serial Number 1, October 2025, Pages 515-551 PDF (1.31 M) | ||
| Document Type: المقالة الأصلية | ||
| DOI: 10.21608/jsst.2025.423331.2119 | ||
| Authors | ||
| رمضان عارف رمضان محروس* 1; Salwa Nasr ALI Mostafa2 | ||
| 1کلية التجارة- جامعة جنوب الوادي | ||
| 2Accounting and Auditing department Faculty of Commerce, South Valley University | ||
| Abstract | ||
| Purpose: The study aims to examine the relationship between Environmental, Social, and Governance (ESG) disclosures and accounting earnings management (AEM) practices within firms listed on the Saudi stock market. Design/Methodology/Approach: The study is based on a sample of 51 Saudi companies, covering the period from 2020 to 2024. An index was developed to measure ESG disclosures at two levels: the first measures each dimension individually, while the second measures overall sustainability practices. The study used a set of control variables covering corporate governance, audit quality, and company characteristics. Descriptive analysis, Pearson correlation analysis, and multiple linear regression analysis were applied. Findings: The results show a negative relationship between a company's ESG disclosures and AEM in companies listed on the Saudi market, whether at the level of each individual ESG dimension or overall performance. Our findings indicate that expanding ESG disclosure improves the quality of financial reporting, suggesting that companies’ managers with greater ESG disclosures have an ethical commitment and are aware of the need to improve the company's long-term value. Practical implications: Our results indicate that expanding ESG disclosures strengthens the ethical behavior of managers, which in turn improves the quality of financial reports and reduces manipulation and earnings management practices. Therefore, it is essential for policymakers and governments in Arab countries to emphasize the need to expand ESG disclosures. For investors, the results show that a company's increased commitment to ESG can boost its reputation and limit opportunistic behavior. | ||
| Keywords | ||
| Accounting Earnings management; sustainability; environmental; social; governance | ||
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