This study relates to three pivotal issues that corporate listed firms deal with in a challenging business environment as a matter of pressing concerns from the stakeholders. Both in developed and emerging economies, the role of corporate governance (CG) and corporate social responsibility (CSR) has been heightened in meeting stakeholders’ expectations, indicating that an effective CG system can support and promote CSR. However, in the corporate world, executives are smart enough to use CSR in their own interest and at the cost of stakeholders. Earnings management (EM) has long been a malpractice used by executives applying their discretion in corporate reporting system and CG mechanisms are designed to eradicate this malpractice. With this interplay among CG, CSR and EM, the evidence of this research from an emerging market context – Indonesia – documents that while a number of CG mechanisms can effectively deter EM and promote CSR, executives can use CSR as a veil to hide their EM practices, and pursue their self-interest at the cost of the firm. These findings have significant policy implications for investors, regulatory bodies, companies and other stakeholders to shape and implement an optimal an optimal governance system that can address the problem of EM and CSR, which is equally application to developed markets in a globalised world.

Suyono, E. & Farooque, O. A., (2017). Do Governance Mechanisms Deter Earnings Management and Promote CSR? Insights from Indonesia, Accounting Research Journal.