Nexus between corporate social responsibility and earnings management: Sustainable or opportunistic

This study examines the association between corporate social responsibility (CSR) and earnings management (EM) among manufacturing firms from a developing economy, Pakistan. To deal with the CSR measurement and data bias, a multimethod approach has applied to measure CSR (both qualitative and quantitative approaches). This research has also established CSR disclosure indices and CSR monetary spending ratio (CSR MSR). Moreover, this research examines both types of EM (accrual‐based as well as real activities‐based) and used annual data set from 2009 to 2018 for 160 nonfinancial firms. For empirical analysis, the two‐stage least square (2SLS) and pooled ordinary least square (POLS) regressions are used. This study finds a negative relationship between CSR and EM, and it supports the notion that firms' commitment to CSR is largely driven by long‐term perspective. However, with respect to each measure of EM and CSR, this relationship is asymmetric.