Accounting scandals in the context of corporate social reporting

Abstract

The main theme of this study is to explore fraudulent disclosure practices in the context of Corporate Social Reporting (CSR), and to investigate the moderating role of beneficiaries in the nexus between media coverage and fraudulent disclosure practices. Beginning with a brief review of the conceptual background of CSR, this article proposes a model to test the relationships between CSR and fraudulent disclosure practices conceptually. The accounting scandals of four banks were scrutinized and analyzed by means of case study in order to validate the results. The findings suggest that CSR should be adopted for giving information to public about the accounting scandals. Four managerial failings indicate that the interaction of media coverage and disclosure practices is unfavorable in the context of CSR. The reasons for accounting scandals are provided. Some recommendations are highlighted in order to implement CSR and corporate governance reforms. This study provides a basis for future studies. If the four factors are well-managed, then the linkage between media coverage and fraudulent disclosure practices is more likely to be positive. A greater organizational focus on CSR is likely to enable the disclosure of accounting scandals to take place earlier, in contrast with existing practice which was focused on hiding losses for as long a period as possible. A limitation of this study is that it is limited to developing a conceptual framework. In future studies, the relationship between media coverage and fraudulent disclosure practices will be investigated empirically and encompass longitudinal studies. © 2011 Macmillan Publishers Ltd.