Effect of financial reporting quality on sustainability information disclosure

Resumen

Interest in Corporate Social Responsibility (CSR) information has increased in recent years. This has led companies to set aside the classical economic view and to adopt the "triple bottom line", reporting social, environmental and financial information, in order to satisfy their stakeholders' needs. Companies that provide high quality financial information tend to be more conservative in their accounting and less inclined to carry out unethical practices such as earnings management. Accordingly, they are more socially responsible. The aim of this paper is to analyse the relationship between financial reporting quality and the quality of CSR information. To do so, we studied a sample composed of 747 international listed non-financial companies for the period 2002-2010. The results obtained of a Tobit method for panel data show that conservative companies, with a high level of accruals quality and/or those that carry out earnings management practices to a lesser extent, report high quality financial information and, moreover, high quality CSR information.