The relationship between CSR and earnings management: The case of Moroccan companies listed on the Casablanca Stock Exchange

This study investigates the relationship between corporate social responsibility (CSR) and earnings management in Morocco, addressing the scarcity of research in African contexts and testing whether CSR-driven firms exhibit reduced financial manipulation. Using a quantitative, positivist approach, we analyze 384 firm-years observations (48 non-financial companies from 2016 to 2023) via logistic regression. Discretionary accruals (proxy for earnings management) are measured using the Kothari et al. model. Analyses were conducted in RStudio (v4.4.2). Results reveal a significant negative correlation between CSR engagement and earnings management, indicating that Moroccan CSR-focused firms prioritize transparency. Larger firms and those with concentrated ownership further reduce earnings manipulation, aligning with agency theory. These findings mirror international trends but emphasize Morocco’s unique institutional dynamics. CSR serves as a disciplinary mechanism against earnings management in Morocco, reinforcing ethical governance. Neo-institutional theory explains how CSR enhances legitimacy and aligns stakeholder interests, particularly in emerging markets. Prioritizing CSR initiatives can strengthen governance frameworks, align managerial behavior with ethical standards, and attract sustainability-focused investors. Firms should embed CSR into core strategies to balance profit motives with stakeholder expectations.