The Impact of Corporate Social Responsibility on Accrual Earnings Management and Real Earnings Management

This study examines the influence of Corporate Social Responsibility on accrual earnings management and real earnings management. This study using control variables company size, KAP quality, and leverage. Sample of this study Obtained with purposive sampling for all non-financial company listed in the Indonesia Stock Exchange from 2001 to 2012. This study will use the data secondary, such as annual report. Data analysis will perform using multiple regressions. Result show that Corporate Social Responsibility is influence to accrual earnings management. Corporate Social Responsibility is a real influence to both abnormal earnings management of cash flow from operations and abnormal of production costsDOI: 10.15408/etk.v15i1.3116


INTRODUCTION
A form of accountability for management in running the company is financial statement. The financial statements provide an overview of the company's financial position, financial performance, and other information. The financial statements are an instrument for assessing management performance. Therefore, the management could have been an earning management to prepare financial statements reflecting management good performance. Healy (1985) proved that the managers do an earning management or use discretionary accruals to increase the compensation which they want to receive. The existence of earnings management that has been conducted by the management affected the financial statements which are prepared do not approach the reality of the economy.
Research on earnings management has a lot to do. Those studies focus on earnings management as a miss-statement (miss-presentation) or conceal the real economic performance. The two tools that are commonly used on earnings management are the accrual management and the real earnings management. In accrual management, the manager may borrow the profits from future periods through revenue acceleration or deceleration of expenses to increase current earnings. While the manipulation of real economic activity as a form of earnings management is done through the company operational activities manipulation.
Corporate Social Responsibility (CSR) is one of the elements which is expressed or presented at the company's annual report. Companies that provide a CSR information means inform financial statements users of that the company has a social awareness and environmental conservation. Reveal the activities related to social responsibility is common for analysts, investors and other stakeholders to demand greater transparency about all business aspects (Kim et al., 2012 The company's goal disclose the social responsibility activities as a form of corporate transparency to the financial statements users in line with the "transparent financial reporting hypothesis" or as a form of opportunistic companies to attract analysts, investors or other users, this is in line with the "opportunistic financial reporting hypothesis" (Kim et al., 2012). If the purpose of company is to express CSR in line with transparent financial reporting hypothesis, then the company would be likely to do little or no profit management. However, if the purpose of company is to express CSR in line with the financial reporting opportunistic hypothesis, then the company will tend to keep earning management.
Earnings management can be defined as "management intervention deliberately in the process of determination of the profits, usually to meet personal goals" (Schipper, 1989). This process often includes beautifying the financial statements, especially the numbers at the bottom i.e. profitability. Earnings management can be a "cosmetic", if the manager manipulates accruals that do not have cash flow consequences. Earnings management can also be "pure", if the manager chooses the action with consequent cash flows with the purpose of changing the profit (Subramanyam and Wild, 2009).
In accrual management, the manager may borrow the future period profits through revenue acceleration or deceleration of expenses to increase current earnings. Management profit earns future periods due to lower net income accelerated to current earnings (Healy, 1985;McNichols and Wilson 1988;Jones, 1991;Rangan 1998;Teoh et al., 1998;Phillips et al. 2003).
Manipulation of real economic activity as a form of profit management through manipulation of the company operational activities, such as providing discounted prices to increase sales and cut discretionary expenditures, such as research and development, to manage earnings (Baber et al., 1991;Dechow and Sloan, 1991;Bushee, 1998;Roychowdhury, 2006 Because of many criticisms to the conventional accounting that is deemed not accommodating the stakeholder interests, appearing new accounting concept i.e Corporate Social Responsibility (Aulia and Kartawijaya, 2011). The concept of CSR or triple bottom line is the concept of company's performance disclosure based not only on economic performance measures (such as acquisition of profit), but also the size of social awareness and environmental conservation. In addition to the pursuit of profit, the company must also play a role in preserving the planet and people social welfare. This concept is called 3BL (Triple Bottom Line) or 3P (Profit, People, Planet) (Santioso and Chandra, 2012). Hackston and Milne (1996) stated that the CSR is a process of communicating social and environmental impacts of organization economic activities to specific groups concerned and on society as a whole.
Trébucq and Russ (2005)  hypothesis" or as a form of opportunistic companies to attract analysts, investors or other users, this is in line with the "opportunistic financial reporting hypothesis" (Kim et al., 2012).

METHOD
The period  to 2013 because in this study required a t-1 and t-2 data. Annual report obtained by downloading at www.idx.co.id.
The method that used in this paper was multiple linier regressions. This study uses three (3) control variables such as: firm size, leverage, and Quality of Public Accounting Firm (KAP). The reason of three control variables selection as in the previous study, the research conducted by these three variables proved effect on earnings management (Kim et al., 2012). The equations that used in this research are:

Equation 1
: AB_PROD t : abnormal production    Hypothesis testing is done after the regression model free from classical assumptions symptoms. To answer whether this hypothesis is accepted or not, it is necessary to test the hypothesis. Here is an explanation of the results of the analysis and discussion.

Hypothesis 1 (equation 4) is intended to test whether Corporate Social
Responsibility accrual effect on earnings management. The results of multiple regression testing are presented in Table 3 below: