Relationship Between Corporate Social Responsibility Disclosure, Corporate Governance, And Tax Avoidance

Maria Natalia,Joni Joni,Verani Carolina

doi:10.24002/kinerja.v25i1.4198

Abstract

This study aims to examine the effect of corporatesocial responsibility disclosure on tax avoidance with corporate governance as moderation variable. The disclosure of corporate social responsibility in this study is measured using performance indicators from Global Reporting Initiative (GRI) 4.1. The score of corporate governance is measured using ASEAN CG Scorecard, while tax avoidance is measured by Cash ETR. The sample in this study is a manufacturing company listed on the Indonesia Stock Exchange in 2018. This study refers to Lanis and Richardson (2012) which found that, the higher the disclosure of social responsibility, the lower the tax avoidance. This study also refers to Salhi et al. (2019) which found that, if corporate governance has been performed well, companies are less likely to do tax avoidance. The results of the study showed that corporate social responsibility and corporate governance had no effect on tax avoidance. Likewise, corporate governance cannot moderate the effect of corporate social responsibility on tax avoidanceKeywords: corporate social responsibility disclosure, corporate governance, tax avoidance, GRI, Asean CG Scorecard, Cash ETR

Highlights

Corporate social responsibility is a form of corporate responsibility to all stakeholders, while tax is a form of corporate social responsibility to stakeholders through the government
Based on the results of the regression analysis in table 3., it can be concluded that both corporate social responsibility and corporate governance have no effect on tax avoidance
Corporate governance cannot moderate the effect of corporate social responsibility on tax avoidance

Summary

Introduction

Corporate social responsibility is a form of corporate responsibility to all stakeholders, while tax is a form of corporate social responsibility to stakeholders through the government. Companies involved in tax avoidance are socially irresponsible companies (Lanis and Richardson, 2012). Research of Hoi, et al (2013) found that companies with irresponsible corporate social responsibility disclosures tend to practice tax avoidance aggressively. According to Dharma and Noviari (2017), companies with responsible corporate social responsibility activities have a lower chance of getting involved in tax avoidance practices. One of the important principles in implementing good corporate governance is the principle of transparency. If the company applies this principle, the company will provide information as required by the provisions, and other relevant information required by shareholders and stakeholders. External parties can access important company information, including tax information (Wahyudi, 2014)

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Conclusion