This study aims to investigate the influence of CEO demographic characteristics, specifically tenure, gender, age and education, on earnings management (EM) in European companies. In addition, it examines the moderating role of corporate social responsibility (CSR) in this relationship.
The research utilizes a sample of 2,150 firm-year observations from 215 European companies listed in the STOXX Europe 600 over the years 2011–2020. The Feasible Generalized Least Squares (FGLS) method is employed to test the developed hypotheses, offering robust and insightful analysis.
The analysis reveals that CEO tenure, gender and education have a significant and negative impact on EM practices in European firms. Furthermore, the study finds that effective CSR initiatives reinforce this negative relationship, suggesting that CSR amplifies the ethical influence of CEOs and contributes to reducing opportunistic financial reporting behaviors.
The findings of this study enrich the existing body of knowledge on how CEO demographics affect EM in European companies. By integrating a moderating variable approach, this research emphasizes the role of CSR, offering a fresh perspective for understanding the dynamic between top executives’ traits and EM. This could guide European firms in aligning leadership selection and CSR strategies for better corporate governance and ethical practices.
This research contributes to the “upper echelons theory” by highlighting the importance of CEO characteristics in the context of EM. It addresses a notable gap in the existing literature and stands as one of the few studies exploring the intricate interplay between CSR, CEO demographic characteristics and EM.
