ESG Performance and Earnings Management : The Moderating Role of CEO Compensation

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Analysis reveals ESG performance lowers earnings management in firms, suggesting CEO compensation enhances governance.

Higher esg performance correlates with lower accrual-based and real activities-based earnings management, promoting transparency.
Moderating effects show that elevated ceo compensation strengthens the negative correlation between esg and both types of earnings management.
The analysis utilized a panel dataset of 7,811 firm-year observations from non-financial listed companies between 2013 and 2022.
Aligning esg goals with high ceo compensation may improve financial reporting integrity, highlighting a need for improved auditing standards.

Eunju Lee (2025) studied this question.

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