The Role of Corporate Social Responsibility Disclosure in Indonesia: How Do Bonus, Debt Covenant, Tax Avoidance Affect Earnings Quality?

Pramuji Handra Jadi, Amrie Firmansyah, Suparna Wijaya, Ferry Irawan, Zef Arfiansyah, Agung Dinarjito, Resi Ariyasa Qadri

Abstract

This study examines the effect of bonuses, debt covenants, and tax avoidance on earnings quality and the role of corporate social responsibility disclosure in moderating these influences. The analysis was carried out on 69 manufacturing companies listed on the IDX from 2014 to 2019, which were selected using purposive sampling so that 414 observations were obtained. The hypotheses are examined with multiple linear regression for panel data. The results of this study suggest that bonuses positively affect earnings quality while debt covenants and tax avoidance harm earnings quality. Moreover, corporate social responsibility disclosure weakens the positive effect of bonuses on earnings quality, does not moderate the effect of debt covenants on earnings quality, and weakens the negative effect of tax avoidance on earnings quality. This study complements the accounting research literature within the framework of positive accounting theory. This study employs corporate social responsibility as a moderating variable in examining the association between three independent variables reflecting the motivation of positive accounting theory and earnings quality, which previous research has never conducted.

 

Keywords: positive accounting theory, sustainability disclosure, motivation, earnings quality.


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