Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

The Work Experience of Internal Control Personnel and Corporate Social Responsibility

Author(s): Haeyoung Ryu, Soo-Joon Chae

Firms are increasingly undertaking corporate social responsibility (CSR) activities. However, an organization’s CSR activities also generate costs, and do not directly translate into its profitability. While CSR activities may improve the image of the company and its products, and positively affect the reputation of top managers, they are sometimes strategically used by the latter for personal advantage, which could result in an agency problem. In this context, this study examines the effect of the operational level of a firm’s internal accounting control system on the quality of its CSR activities, which monitors and keeps the senior management in check. The results show that a lengthier work experience (higher number of months) of the personnel in charge of the internal accounting control system leads to a higher quality level of CSR activity adoption and performance. These results suggest that a higher average number of months of experience in internal accounting increases the learning effect of the personnel, as they perform the same work repeatedly over time and hone their skills. The higher work experience effectively controls the agency problem, and subsequently prevents CSR activities from being used as a means of satisfying managers’ personal interests.

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