Corporate Social Responsibility, Enterprise Risk Management, and Real Earnings Management: Evidence from Managerial Confidence

Abstract This paper examines the relationship between enterprise risk management (ERM) and corporate social responsibility (CSR) and how this relationship is affected by managerial confidence and real activities earnings management (REM). The findings show that firms with more effective ERM are more willing to engage in CSR behaviors. From the interaction terms of managerial confidence and ERM, we find that when firms with more confident CEOs who engage in real activities manipulation are higher, their CSR inputs are larger. The managerial confidence affects corporate policies, including reducing the effects of overall risk on CSR. We also find that confident CEOs with higher shareholdings have a stronger coherence to firms, and therefore, they are more likely to increase CSR activities to enhance firms’ reputation through REM.