The Impact Of Corporate Social Responsibility And Investor Protection On Earning Management And Corporate Performance

Nowadays, "Corporate social responsibility" has increasingly become hot topics, which rose in the mid-20 th century in Western countries firstly. With the rapid development of China’s economy, corporate social responsibility has been paid more and more attention in the domestic. “The decision”, made by Eighth session of the Third Plenary Session, was explicitly specified as one point of six keys in the new round of state-owned enterprise reform. Some business leaders also pointed out that the implementation of corporate social responsibility reform must be put in an important position, if firms want to achieve their ambitious goals. Companies that paying attention to corporate social responsibility always has perfect corporate governance mechanism, the information transparency they published is higher, the possibility they doing earning management is decreased. In the areas where investor protection system is perfect, the law enforcement effect is stronger; the earning management behavior may be inhibited. Companies fulfilling their social responsibilities mean maintenances to the stakeholders such as interests. Also, the increasingly sophisticated legal system on China’s capital market reflects the protection to investors. Companies fulfilling their social responsibilities mean maintenances to the stakeholders such as interests. Also, the increasingly sophisticated legal system on China’s capital market reflects the protection to investors; such behaviors may have effects on investors and then investors’ responses will reflect on corporate performance, so study on the impact of corporate social responsibility and investor protection on earning management and corporate performance is valuable.Based on the previous study, this paper improves the measurement of earning management and corporate performance index. It examines the impacts of corporate social responsibility, investor protection and earning management on corporate performance with a sample of listed companies in Shanghai and Shenzhen Stock Exchange from 2008 to 2012. The content is as following:The first part is about the effects of corporate social responsibility and investor protection on earning management, the results show that China’s regulators and other participants pay more attention to discretionary accruals, corporate social responsibility can reduce listed companies’ discretionary accruals effectively. As earning smoothing and earning aggressive are relatively covert, listed companies’ perfect law system can increase the possibility of earning smoothing and both listed companies’ corporate governance and legal environment have no effect on earning aggressive.The second part is discussing the effects of corporate social responsibility and investor protection on corporate performance, the results show that corporate social responsibility has no effect on corporate performance and investor protection has positive effect on corporate performance.Finally, in response to the conclusions mentioned above, this essay provides suggestions about how to supervise financial situation with focus and how to improve corporate performance.