Corporate social responsibility and tax aggressiveness: An empirical analysis

Corporate Social Responsibility and Tax Aggressiveness

Does corporate social responsibility affect corporate tax aggressiveness?

PURPOSE: The purpose of this paper is to empirically test legitimacy theory by comparing the corporate social responsibility (CSR) disclosures of tax aggressive corporations with those of non-tax aggressive corporations in Australia. DESIGN/METHODOLOGY/APPROACH: A unique sample of 20 Australian corporations accused by the Australian Taxation Office of engaging in tax aggressive activities during the 2001-2006 period was hand-collected. These 20 tax aggressive corporations were then matched with 20 non-tax aggressive corporations (based on industry classification, corporation size and time period). This process generated a choice-based sample of 40 corporations for empirical analysis. Using content analysis techniques, financial accounting data were gathered from the Aspect-Huntley database and CSR disclosures were individually measured for each corporation in the sample. Various statistical techniques were then used (e.g. paired sample statistics, Pearson correlation analysis and ordinary least squares regression analysis) to test legitimacy theory. FINDINGS: Overall, the empirical results consistently show a positive and statistically significant association between corporate tax aggressiveness and CSR disclosure, thereby confirming legitimacy theory in the context of corporate tax aggressiveness. ORIGINALITY/VALUE: The paper provides empirical evidence in support of legitimacy theory as an explanation for why specific corporations disclose more CSR-related information than others. Additionally, to the best of the authors' knowledge, the paper is one of the first to document an empirical association between corporate tax aggressiveness and CSR in the literature.

Companies' disclosure is an important thing to do because it is one of the corporate governance concepts. The purpose of this study is first to investigate the influence of corporate social responsibility disclosure on corporate tax aggressiveness. Also, to prove the influence of managerial ownership as a moderating variable in the relationship between corporate social responsibility and tax aggressiveness. This study uses secondary data, namely financial statements and annual reports that have been published by companies on the Indonesia Stock Exchange and the company's website. This study's population are mining companies listed on the Indonesia Stock Exchange during the 2014-2018 period. Using the purposive sampling method, the total sample of this study is 30 data from 39 companies. Data were analyzed by descriptive analysis and multiple regression analysis. The results of this study indicate that Corporate social responsibility disclosure affects tax aggressiveness. And managerial ownership as a moderating variable affects the relationship between corporate social responsibility disclosure and tax aggressiveness. It is suggested that companies must pay attention to the CSR disclosure and ownership structure and their relationship with tax aggressiveness.

This study aims to analyze the effect of corporate social responsibility on tax aggressiveness. Agency theory is used to explain the relationship between corporate social responsibility variables and tax aggressiveness. The relationship between principal and agent has different interests. The agent has more information than the principal, so opportunistic actions may occur by agents through tax aggressiveness; furthermore, agents use corporate social responsibility to hide these opportunistic actions. The research sample used is the annual financial statements of mining companies listed on the Indonesia Stock Exchange in 2013-2020. The results of the analysis of 96 samples show that corporate social responsibility has a negative and significant effect on tax aggressiveness. This means that the higher the company carries out corporate social responsibility activities, the smaller the company is willing to take tax aggressiveness actions. This shows that companies tend to avoid tax aggressiveness and comply more with applicable tax regulations to improve the company's image as obedient taxpayers. Although corporate social responsibility is bound by regulations, companies do not take advantage of it in terms of aggressive tax practices. Furthermore, the company shows a tendency to enforce the government's plan in terms of tax revenue along with the company's long-term goals. This study expands the focus of the literature on developed economies by examining the relationship between corporate social responsibility and corporate tax aggressiveness in an emerging Asian economic setting, namely Indonesia. It is also an empirical study that focuses on mining companies in Indonesia.

This study was administered to analyze and obtain empirical evidence regarding Corporate Social Responsibility (CSR) disclosure on tax aggressiveness and the impact of corporate CSR disclosure and tax aggressiveness on investor reactions. The population of this study were manufacturing companies listed on the Indonesia Stock Exchange (BEI) in 2016-2018. Samples were 147 companies selected using purposive sampling technique. Path analysis was performed to analyze the data of this study. The results of this study showed that CSR disclosure negatively affected the tax aggressiveness and CSR affected investor reactions. Further, tax aggressiveness did not affect investor reactions. In addition, CSR disclosure and tax aggressiveness did not share simultaneous influence on investor reactions. Keywords: CSR Disclosure, tax aggressiveness, Investor Reaction, Profitability, Company Size and Leverage DOI: 10.7176/RJFA/11-22-10 Publication date: November 30 th 2020

Corporate social responsibility disclosure, political connection and tax aggressiveness have become the focus of the media. By using samples of China's listed firms from 2008 to 2014, this study examines the relationship among corporate social responsibility disclosure, political connection and tax aggressiveness. The results show that corporate social responsibility disclosure significantly strengthens the possibility of tax aggressiveness; firms with no or less close political connections can make use of the disclosure of corporate social responsibility to do tax aggressiveness. Furthermore, the change of political connection can significantly weaken the positive association between corporate social responsibility disclosure and tax aggressiveness. However, some data are collected by hands and that may cause some deviations. These findings help governments, managements and investors evaluate firm's behavior and make decisions.

Objective: The objective of this study is to investigate the relationship between corporate social responsibility and tax aggressiveness, with the aim of looking at the firmness of the relationship. Theoretical Framework: This study aims to examine the strength and reliability of the connection between corporate social responsibility (CSR) and aggressive tax dodging actions through the utilization of a meta-analysis methodology. Method: The quantitative method used is a meta-analysis approach of 61 studies and 228 observations. Results and Discussion: The results of this study found a firm relationship between corporate social responsibility and tax aggressiveness. Through a meta-analysis, the results of the negative relationship between CSR and tax agressiveness were obtained. The next result was to confirm that the heterogeneity of previous research results related to CSR, and tax agresiveness was due to the diversity of CSR measurement strategies and characteristics of the state legal system. Research Implications: This research has provided input into the fields of accounting and taxation by giving confidence in the relationship between aggressive tax behavior and the existence of disclosures of social responsibility Originality/Value: This research is one of several studies using a meta-analysis approach. Different from other topics raised using this approach, in this research, the emphasis of the study is on the disclosure of CSR, which is correlated with the degree of the tendency of aggressive tax behavior or activities. The study also uses moderators that have not been used in previous meta-analysis studies, namely state law characteristics.

This study aims to investigate whether corporate social responsibility activities are associated with more or less tax avoidance by focusing on this interrelationship in mandatory vs. voluntary regulatory regimes. The sample includes 6,668 firm-year observations of Chinese A-share firms listed on the Shanghai and Shenzhen stock exchanges over 2011–2019. The study uses corporate culture and risk management theories to develop the hypotheses. Regression analysis and various robustness tests are employed to test the hypotheses. The data are retrieved from the HEXUN CSR system and CSMAR and WIND databases. Consistent with the predictions of corporate culture theory, which argues that aggressive tax avoidance cannot be synchronously coupled with corporate social responsibility, the paper finds that notwithstanding regulatory regime, when the level of corporate social responsibility increases, the level of tax aggressiveness decreases. Thus, the results show that firms reporting corporate social responsibility tend to be less tax aggressive. Firms that engage in more corporate social responsibility activities are less likely to be tax aggressive, irrespective of regulatory regimes in place. Moreover, pollution indicators have little effect on corporate social responsibility and tax aggressiveness in Chinese institutional settings. The study contributes to the business ethics literature by implying the role of tax avoidance as a part of CSR and not as a separate non-CSR element of companies’ activities. AcknowledgmentThis paper is co-funded by the European Union through the European Education and Culture Executive Agency (EACEA) within the project “Embracing EU corporate social responsibility: challenges and opportunities of business-society bonds transformation in Ukraine” – 101094100 – EECORE – ERASMUS-JMO-2022-HEI-TCH-RSCH-UA-IBA/ERASMUS-JMO-2022-HEI-TCHRSCH https://eecore.snau.edu.ua/

Minimizing taxes through aggressive tax actions is an increasingly common practice by companies in the world. This socially irresponsible act is considered normal and reasonable business practice. In fact, taxes are a form of social engagement that puts the company's overall reputation at risk. Besides being a form of corporate participation in sustainable economic development, CSR is also a key factor in the success and survival of a company. The diversity of research results that have been carried out has not taken into account observations made during the COVID-19 pandemic. This study aims to empirically examine the effect of CSR on corporate tax aggressiveness during the COVID-19 pandemic. Using a sample of 35 companies in Indonesia collected from the Indonesia Stock Exchange database for the 2020 period, the results of this study indicate that CSR disclosure in the fields of education, health, arts and culture, religion, entrepreneurship, infrastructure, and the environment does not have a significant relationship with aggressiveness. corporate tax. However, CSR related to social welfare has a significant negative relationship with tax aggressiveness.

PurposeThis paper addresses the role of corporate social responsibility (CSR) performance as a potential mechanism for reducing firms' likelihood of engaging in tax aggressiveness (TAG). The paper also contributes to the existing literature by addressing the moderating effect of national cultures on the link between CSR performance and corporate TAG.Design/methodology/approachThe focus is placed on an unbalanced panel of 2,696 companies distributed in 30 countries and seven economic sectors over the period of 2002–2014.FindingsThe results provide support for those companies achieving high corporate social performance (CSP), corporate environmental performance (CEP) and corporate governance performance (CGP) being less likely to engage in aggressive tax practices. Finally, the results identify some national cultural dimensions moderating the link between disaggregated measures of CSR performance and firms' TAG.Research limitations/implicationsThe difficulty of accessing CSR and TAG data for non-listed companies could bias the data set towards a compliant company profile because of the higher visibility. In addition, the use of effective tax rates to examine firms' TAG should be interpreted with some caution.Practical implicationsThe paper's findings provide unique and useful information for company stakeholders and managers aiming to address the factors that enhance firms' incentives to engage in aggressive tax practices.Originality/valueThis paper addresses the multidimensional nature of CSR performance by analysing the links between CSP, CEP and CGP and corporations' TAG. Furthermore, the research addresses the way in which national culture moderates the links between disaggregated measures of CSR performance and corporate TAG.

One of the major sources of revenue to government is through taxes levy on taxpayers including corporate organizations. However, companies find ways to reduce their tax liabilities (either legally or otherwise). To avoid penalties, there is a need for every company to set effective management policies and engage in social activities that are allowed by the tax laws as well as tax authorities. Therefore, this study examined the effect of management compensation and corporate social responsibilities on corporate tax aggressiveness practices among listed non-financial companies in Nigeria. The study specifically examined the effects of management compensation and corporate social responsibility on corporate tax aggressiveness practice. Ex-post facto research design was adopted. The sample of the study comprised of sixty-two companies chosen from the total population of one hundred and five manufacturing companies listed on the floor of the Nigerian Stock Exchange for the period ended 31st December 2024. The study covered the period spanning from 2012 to 2024. The data were analyzed using descriptive (mean, standard deviation, minimum and maximum values) in order to summarized the large set of data collected while the hypotheses were tested using random-effect regression analysis. The result of the study indicated that management compensation has a positive and significant effect on corporate tax aggressiveness practices of listed non-financial companies in Nigeria as shown by coefficient values of 4.3789 with p-value of 0.004 at 5% level of significance. The result implies that management can engage in corporate tax aggressiveness practice if his reward system is attributed to lower tax payment and consequently better reward system, indicating the higher the management compensation, the higher the level of corporate tax aggressiveness. On the other hand, the results of the corporate social responsibility has a positive but insignificant influence on corporate tax aggressiveness among listed non-financial companies in Nigeria. Therefore, the study concluded that management compensation has high tendency of increasing the practices among listed non-financial companies in Nigeria. The study therefore recommended that the reward or compensation of the management should not be solely tied to only financial performance as this could make the management to engage in some manipulations and dysfunctional behavior that will have bad reputation on the company.

Objective: The objective of this study is to investigate the relationship between corporate social responsibility and tax aggressiveness, with the aim of looking at the firmness of the relationship. Theoretical Framework: This study aims to examine the strength and reliability of the connection between corporate social responsibility (CSR) and aggressive tax dodging actions through the utilization of a meta-analysis methodology. Method: The quantitative method used is a meta-analysis approach of 61 studies and 228 observations. Results and Discussion: The results of this study found a firm relationship between corporate social responsibility and tax aggressiveness. Through a meta-analysis, the results of the negative relationship between CSR and tax agressiveness were obtained. The next result was to confirm that the heterogeneity of previous research results related to CSR, and tax agresiveness was due to the diversity of CSR measurement strategies and characteristics of the state legal system. Research Implications: This research has provided input into the fields of accounting and taxation by giving confidence in the relationship between aggressive tax behavior and the existence of disclosures of social responsibility Originality/Value: This research is one of several studies using a meta-analysis approach. Different from other topics raised using this approach, in this research, the emphasis of the study is on the disclosure of CSR, which is correlated with the degree of the tendency of aggressive tax behavior or activities. The study also uses moderators that have not been used in previous meta-analysis studies, namely state law characteristics.

This study aims to examine the influence of the corporate taxpayers’ level of CSR disclosure and environmental performance on the level of tax aggressiveness. This study took a sample of non-financial companies listed on the Indonesian Stock Exchange during 2009-2012. This study shows that the corporate taxpayers’ level of CSR disclosure has significant negative effect towards the tax aggressiveness. It means the higher the level of the CSR disclosure, the lower the company’s tax aggressiveness. This study also proves that good environmental performance will strengthen the negative effect of CSR disclosure on tax aggressiveness. The assessment of environmental performance is conducted by the Ministry of Environment as independent party. It means that the higher the score of company’s environmental performance, the higher the commitment to pay taxes. This study supports the view that more socially responsible corporations are likely to be less tax aggressive. DOI : https://doi.org/10.21632/irjbs.9.2.93-104 Keywords: Corporate Social Responsibility Disclosure, Environmental Performance, Tax Aggressiveness

This study aimed to empirically analyze the relationship between corporate reporting, both mandatory (financial reporting) and voluntary (Corporate Social Responsibility (CSR) disclosure) reporting, three corporate governance mechanisms (board size, independent board, and CEO duality), and tax aggressiveness in Indonesia. The study used a collected dataset of 121 public companies listed on the Indonesian stock exchange from 2016 to 2020. The data was collected from annual and sustainability reports published on the IDX and the company websites. The data was categorized based on classifications of non-financial industries because different characteristics and business cycles may influence tax aggressiveness decisions. Using the panel OLS approach, the research found that, in most industries, aggressive financial reporting positively relates, while CSR disclosures were negatively related to tax aggressiveness. The results also found that corporate governance mechanisms significantly related to tax aggressiveness in most industries. The findings suggest that board members, particularly independent boards with tax expertise and experience, can influence aggressive tax decisions. This study is the first to extract testing by industry classification, using mandatory financial reporting and voluntary CSR disclosures in Indonesia as indicators of corporate tax aggressiveness. The findings provide knowledge on company governance strategies to reduce aggressive tax actions. Keywords: aggressive financial reporting, corporate social responsibility, corporate governance mechanisms, tax aggressiveness