Creative accounting and corporate social responsibility

Abstract
The literature has extensively examined creative accounting and corporate social responsibility (CSR). However, there is limited evidence on the interaction between voluntary activities, such as CSR, and accounting practices. This study investigates the association between creative accounting and CSR.
A mixed-methods approach was employed, integrating both qualitative and quantitative methods—an underutilised research design in this area. This approach provides a more comprehensive perspective compared to single-method studies. The qualitative component, based on interviews, offers new insights into the relationship between creative accounting and CSR that may not be easily captured through quantitative analysis. In contrast, the quantitative analysis tests the relationship between key variables using secondary data.
The qualitative research involved interviews with eleven chief financial executives from UK-listed companies in the FTSE 350 index and six auditors from the "Big Four" accounting firms in the UK. The quantitative data was collected from DataStream, Thomson Reuters Asset 4, and Bloomberg, covering non-financial UK firms listed in the FTSE 350 index from 2010 to 2019.
The findings from both methods reveal that UK companies are willing to reduce CSR spending as a tool to achieve financial objectives. Additionally, the study identifies a bidirectional relationship between creative accounting and CSR performance, driven by corporate principles and values. Similarly, a negative relationship is found between creative accounting and CSR disclosure. However, firms are more likely to engage in impression management through CSR disclosures in meetings, which appears to be more effective than relying solely on CSR information presented in annual reports.