Table 8.
Results using GRI.
| OLS ESTIMATION | GLS ESTIMATION | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Panel A. France | ||||||||||||||||
| Regressors |
DA | DCFO | DEXP | TEM | DA | DCFO | DEXP | TEM | ||||||||
|
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
|
| ROA | −0.00128 | −0.66 | 0.15338 | 8.09 (***) | 0,05400 | 1,71 (*) | −0,18848 | −6.44 (***) | −0.00108 | −0,53 | 0,14986 | 7,88 (***) | 0,05221 | 1,68 (*) | −0,20412 | −6,37 (***) |
| BtM | −0.00028 | −0.74 | −0.00080 | −0.43 | −0,00870 | −2,21 (**) | 0,00907 | 2.26 (**) | −0.00035 | −0,71 | −0,00072 | −0,41 | −0,00723 | −2,17 (**) | 0,00889 | 2,19 (**) |
| DEBTS | −0.00126 | −3.35 (***) | −0.00313 | −1.74 (*) | 0,00505 | 1,35 | −0,00274 | −0.75 | −0.00133 | −3,12 (***) | −0,00311 | −1,71 (*) | 0,00600 | 1,25 | −0,00301 | −0,73 |
| LN | 0.00017 | 2.86 (***) | −0.00212 | −5.55 (***) | 0,72225 | 0,86 | 0,00190 | 2.32 (**) | 0.00022 | 2,53 (***) | −0,00259 | −5,42 (***) | 0,66374 | 0,82 | 0,00209 | 2,28 (**) |
| SEO | −0.00176 | −1.97 (**) | 0.02935 | 5.1 (**) | 0,00220 | 0,17 | −0,02840 | −2.24 (**) | −0.00169 | −1,95 (**) | 0,03768 | 4,93 (**) | 0,00237 | 0,15 | −0,03359 | −2,21 (**) |
| GRI | 0.00053 | 0.72 | −0.02343 | −4.88 (***) | 0,00320 | 0,31 | 0,01704 | 1.72 (*) | 0.00065 | 0,70 | −0,02807 | −4,79 (***) | 0,00263 | 0,26 | 0,01576 | 1,70 (*) |
| FRQ-GRI | −0.00118 | −1.33 | 0.01698 | 3.44 (***) | −0,00482 | −0,39 | −0,00949 | −0.79 | −0.00111 | −1,31 | 0,02025 | 3,36 (***) | −0,00626 | −0,34 | −0,00829 | −0,73 |
| adjusted R2 |
0.43% |
9.64% |
0.43% |
2.84% |
0,40% |
9,35% |
0,39% |
2.72% |
||||||||
| Panel B. Germany | ||||||||||||||||
| Regressors |
DA | DCFO | DEXP | TEM | DA | DCFO | DEXP | TEM | ||||||||
|
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
|
| ROA | 0.00395 | 1.14 | 0.21303 | 8.03 (***) | 0,03534 | 0,61 | −0,22832 | −3.31 (***) | 0.00504 | 1,09 | 0,27588 | 7,88 (***) | 0,04199 | 0,58 | −0,27810 | −3,28 (***) |
| BtM | 0.00010 | 0.19 | 0.00317 | 1.33 | −0,01161 | −1,66 (*) | 0,00857 | 1.21 | 0.00009 | 0,12 | 0,00298 | 1,29 | −0,01132 | −1,65 (*) | 0,00957 | 1,18 |
| DEBTS | −0.00074 | −1.69 (*) | −0.00189 | −0.97 | 0,00125 | 0,28 | −0,00002 | −0.53 | −0.00093 | −1,67 (*) | −0,00226 | −0,92 | 0,00135 | 0,26 | −0,00002 | −0,51 |
| LN | 0.00006 | 1.21 | −0.00121 | −5.22 (***) | 0,00039 | 0,61 | 0,00077 | 1.14 | 0.00007 | 1,18 | −0,00114 | −5,17 (***) | 0,00043 | 0,57 | 0,00072 | 1,13 |
| SEO | −0.00124 | −1.76 (*) | 0.00746 | 2.96 (***) | −0,00271 | −0,44 | −0,00529 | −0.85 | −0.00103 | −1,72 (*) | 0,00908 | 2,91 (***) | −0,00254 | −0,42 | −0,00685 | −0,81 |
| GRI | 0.00072 | 1.75 (*) | −0.00255 | −1.49 | 0,00460 | 1,22 | −0,00164 | −0.41 | 0.00083 | 1,71 (*) | −0,00263 | −1,43 | 0,00509 | 1,21 | −0,00195 | −0,36 |
| FRQ-GRI | −0.00134 | −1.77 (*) | 0.00139 | 0.56 | −0,00740 | −1,32 | 0,00516 | 0.89 | −0.00142 | −1,73 (*) | 0,00163 | 0,52 | −0,00766 | −1,29 | 0,00472 | 0,85 |
| adjusted R2 |
0.31% |
14.81% |
0.19% |
1.75% |
0,28% |
14,42% |
0,18% |
1.63% |
||||||||
| Panel C. Italy | ||||||||||||||||
| Regressors |
DA | DCFO | DEXP | TEM | DA | DCFO | DEXP | TEM | ||||||||
|
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
|
| ROA | 0.01176 | 1.41 | 0.16704 | 8.59 (***) | 0,09789 | 1,67 (*) | −0,23532 | −3.57 (***) | 0.01126 | 1,39 | 0,17172 | 8,51 (***) | 0,08085 | 1,64 (*) | −0,20285 | −3,49 (***) |
| BtM | 0.00088 | 1.99 (**) | 0.00344 | 2.71 (***) | 0,00693 | 1,51 | −0,00892 | −2.13 (**) | 0.00072 | 1,96 (*) | 0,00321 | 2,68 (***) | 0,00620 | 1,48 | −0,00845 | −2,09 (**) |
| DEBTS | −0.00031 | −1.17 | 0.00199 | 2.64 (***) | −0,00132 | −0,53 | −0,00072 | −0.31 | −0.00025 | −1,09 | 0,00200 | 2,57 (***) | −0,00114 | −0,49 | −0,00063 | −0,28 |
| LN | −0.00005 | −0.75 | −0.00099 | −5.77 (***) | −0,00079 | −1,31 | 0,00161 | 2.64 (**) | −0.00006 | −0,72 | −0,00098 | −5,69 (***) | −0,00101 | −1,28 | 0,00198 | 2,55 (**) |
| SEO | −0.00055 | −0.38 | 0.00377 | 1.96 (**) | 0,00043 | 0,73 | −0,00447 | −0.47 | −0.00065 | −0,35 | 0,00332 | 1,91 (*) | 0,00036 | 0,67 | −0,00387 | −0,42 |
| GRI | −0.00061 | −1.67 (*) | 0.00006 | 0.54 | 0,00485 | 1,22 | −0,00541 | −1.42 | −0.00054 | −1,65 (*) | 0,00006 | 0,51 | 0,00523 | 1,19 | −0,00556 | −1,38 |
| FRQ-GRI | 0.00113 | 0.84 | −0.00205 | −0.81 | −0,00973 | −1,28 | 0,01289 | 1.38 | 0.00104 | 0,83 | −0,00235 | −0,77 | −0,01036 | −1,24 | 0,01610 | 1,32 |
| adjusted R2 |
0.86% |
10.81% |
0.51% |
2.01% |
0,84% |
10,73% |
0,48% |
1.84% |
||||||||
| Panel D. Spain | ||||||||||||||||
| Regressors |
DA | DCFO | DEXP | TEM | DA | DCFO | DEXP | TEM | ||||||||
|
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
parameter |
t-value |
|
| ROA | 0.00048 | 0.09 | 0.17249 | 4.48 (***) | 0,00744 | 0,11 | −0,17328 | −2.26 (**) | 0.00044 | 0,03 | 0,16248 | 4,42 (***) | 0,00738 | 0,10 | −0,18038 | −2,21 (**) |
| BtM | 0.00003 | 0.11 | 0.00083 | 0.69 | 0,00004 | 0,24 | −0,00087 | −0.82 | 0.00004 | 0,08 | 0,00094 | 0,62 | 0,00003 | 0,22 | −0,00101 | −0,78 |
| DEBTS | −0.00005 | −0.19 | −0.00060 | −0.64 | −0,00109 | −0,72 | 0,00159 | 0.98 | −0.00005 | −0,14 | −0,00071 | −0,60 | −0,00096 | −0,69 | 0,00205 | 0,93 |
| LN | −0.00001 | −0.17 | −0.00050 | −2.62 (***) | −0,00004 | −0,94 | 0,00051 | 1.16 | −0.00001 | −0,12 | −0,00054 | −2,57 (***) | −0,00005 | −0,91 | 0,00058 | 1,12 |
| SEO | 0.00094 | 1.11 | −0.00237 | −0.71 | 0,00902 | 1,12 | −0,00540 | −0.68 | 0.00092 | 1,06 | −0,00301 | −0,66 | 0,00791 | 1,08 | −0,00524 | −0,64 |
| GRI | −0.00079 | −1.67 (*) | 0.00016 | 0.87 | 0,00037 | 0,10 | −0,00111 | −0.32 | −0.00096 | −1,65 (*) | 0,00016 | 0,85 | 0,00042 | 0,09 | −0,00095 | −0,28 |
| FRQ-GRI | 0.00172 | 1.88 (*) | −0.00585 | −1.6 | 0,01010 | 1,21 | −0,00270 | −0.33 | 0.00202 | 1,82 (*) | −0,00706 | −1,56 | 0,01102 | 1,18 | −0,00348 | −0,26 |
| adjusted R2 | 0.52% | 8.03% | 0.27% | 1.93% | 0,49% | 7,88% | 0,26% | 1.86% | ||||||||
Note: This table shows the results of the estimation of Eq (8) using the GRI as explanatory variable disaggregated by country: France (Panel A), Germany (Panel B), Italy (Panel C) and Spain (Panel D). Dependent variable: TEM (total earnings management). Disaggregation of TEM: DA (discretionary accruals), DCFO (discretionary cash flow from operations), DEXP (discretionary operating expenses). Control variables: ROA: Return on Assets; BtM: Book-to-Market ratio; DEBT: Level of indebtedness measured by Debt-to-Book value ratio; LN: Log-asset; Dummy variables: SEO: 1 when the company has increased capital in t, t+1 and t+2; otherwise, 0; GRI: 1 if the company complies with GRI standards and submits the information to external verification; 0 if it complies with GRI standards but does not undergo external verification; −1 if it fails to comply with GRI standards; FRQ_GRI: Multiplicative variable that takes the value of 1 if the company has increased the capital and has the highest rating of GRI; takes a value of −1 if the company has increased the capital but has the lowest rating of GRI, and otherwise takes 0 value. (*), (**) and (***) indicate that the parameter is statistically significant at a confidence level of 10%, 5% and 1%, respectively. Adjusted R2 indicates that the explanatory power of the model. GLS and OLS estimation results are provided.