Corporate social responsibility and corporate tax aggressiveness: Evidence of mandatory vs. voluntary regulatory regimes impact


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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.

This 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

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    • Table 1. Theories explaining the relationship between CSR and tax aggressiveness
    • Table 2. Formation of the sample
    • Table 3. Variable definition
    • Table 4. Descriptive statistics
    • Table 5. Multiple regression results
    • Table 6. Mandatory and voluntary disclosure regression results
    • Table 7. Additional analysis
    • Table A1. Pearson correlation matrix
    • Table A2. Robustness regression results
    • Table A3. Robustness group regression results
    • Table A4. Heckman’s model regression results
    • Table A5. Heckman’s model group regression results
    • Conceptualization
      Oleh Pasko, Alvina Oriekhova
    • Methodology
      Oleh Pasko, Li Zhang, Mykola Hordiyenko
    • Project administration
      Oleh Pasko
    • Supervision
      Oleh Pasko, Li Zhang
    • Writing – original draft
      Oleh Pasko, Li Zhang
    • Writing – review & editing
      Oleh Pasko, Li Zhang, Alvina Oriekhova, Mykola Hordiyenko, Yarmila Tkal
    • Data curation
      Li Zhang
    • Formal Analysis
      Li Zhang, Mykola Hordiyenko
    • Investigation
      Li Zhang, Alvina Oriekhova, Mykola Hordiyenko, Yarmila Tkal
    • Visualization
      Li Zhang, Alvina Oriekhova, Yarmila Tkal
    • Validation
      Alvina Oriekhova, Mykola Hordiyenko, Yarmila Tkal