CSR reports: a strategic tool

Abstract

This study investigates whether a positive tone in Corporate Social Responsibility (CSR) reports is implemented with the goal to greenwash earnings management, a result previously found on this topic (e.g., Li et al, 2023). This study uses a novel approach, typically not used in this field, to study this topic. Agglomerative hierarchical cluster analyses are conducted using two proxies for greenwashing, sentiment scores provided by the dictionary of Loughran and McDonald (2011), and the Modified Jones Model (Dechow, 1995) to proxy earnings management. By using ESG data to proxy greenwashing, this study found that there were only few companies that employ a positive tone as a strategy to greenwash earnings management in a sample consisting of companies from Europe.