Social Responsibility Information Disclosure And Cash Flow Manipulation

Good cash flow cycle can help company improve its value along with economicdevelopment, thus corporate cash flow is becoming an important resource that matters acompany’s survival and development. Only normal running information of enterprises istransferred, the basic interests of business stakeholders can be effectively protected, so thecash flow indicators are included in the assessment and management of enterprise IPOperformance appraisal system.This measure aims to improve the practical efficiency of cash flow, which also bringstremendous assessment pressure to the corporate managers, who get around the rules for thedomestic legal system is imperfect and manipulate cash flow by forging related informationin order to meet checks of analysts and related departments.Due to internal agency problems between management and owners as well as theexistence of internal and external information asymmetry, transferring false informationbrought huge losses to corporate owners, investors and other stakeholders. Therefore, tostrengthen supervision of corporate disclosure and effectively reduce informationasymmetry, adverse selection control has become an urgent need to address the problem,which is the focus of this study.In this paper, we take data of listed companies in Shanghai and Shenzhen in2010and2011as example, and empirically exam the relevance of cash flow manipulation and socialresponsibility information disclosure of listed companies. The study find that singlepublished CSR reports have a significant negative correlation with the degree of cash flowmanipulation, and in these individual social responsibility reports, enterprises who disclosemore detailed and more quantitative CSR reports, whose degree of cash flow manipulationis lower, and the robustness test still hold.This empirical study confirms that social responsibility information disclosure canrestrict corporate cash flow manipulation behavior, which helps improve our internal controlsystem for enterprises, and strengthen information disclosure laws and regulations. It also enables enterprises to increase the authenticity of social responsibility disclosure, who thustry hard to improve corporate image, reduce information asymmetry of the market, andreduce the loss of stakeholders to further enhance the fairness and efficiency of marketresources allocation.