TY - JOUR

T1 - CSR and tax avoidance: A review of empirical research

AU - Kovermann, Jost Hendrik

AU - Velte, Patrick

PY - 2021/1/1

Y1 - 2021/1/1

N2 - This article is a literature review that covers quantitative empirical research on the association between corporate social responsibility (CSR) and corporate tax avoidance. We conduct a structured literature review and evaluate the empirical-quantitative results with regard to the CSR–tax avoidance link and vice versa. The association between CSR and tax avoidance is both theoretically and empirically ambiguous. However, the majority of studies finds a negative association between CSR and tax avoidance. Nevertheless, results are highly dependent on measurement of the respective constructs and other marginal conditions. Comparability of recent research on the issue is in particular limited due to heterogeneous CSR and tax avoidance metrics and due to a potentially bidirectional relationship. Results imply that there is not necessarily a stable association between CSR performance, as measured by CSR scores or ratings, CSR reporting, and a firm‟s tax practices. Thus, socially responsible investors have to make a decision about whether they are prepared to invest in firms that have high CSR scores and strong CSR performance while aggressively avoiding taxes. Investors who perceive tax payments as part of a firm‟s responsibility towards society, have to select their investments with great care, as CSR scores and CSR reporting are of only limited informative value with regard to tax avoidance.

AB - This article is a literature review that covers quantitative empirical research on the association between corporate social responsibility (CSR) and corporate tax avoidance. We conduct a structured literature review and evaluate the empirical-quantitative results with regard to the CSR–tax avoidance link and vice versa. The association between CSR and tax avoidance is both theoretically and empirically ambiguous. However, the majority of studies finds a negative association between CSR and tax avoidance. Nevertheless, results are highly dependent on measurement of the respective constructs and other marginal conditions. Comparability of recent research on the issue is in particular limited due to heterogeneous CSR and tax avoidance metrics and due to a potentially bidirectional relationship. Results imply that there is not necessarily a stable association between CSR performance, as measured by CSR scores or ratings, CSR reporting, and a firm‟s tax practices. Thus, socially responsible investors have to make a decision about whether they are prepared to invest in firms that have high CSR scores and strong CSR performance while aggressively avoiding taxes. Investors who perceive tax payments as part of a firm‟s responsibility towards society, have to select their investments with great care, as CSR scores and CSR reporting are of only limited informative value with regard to tax avoidance.

KW - Management studies

KW - tax avoidance

KW - tax planning

KW - CSR

KW - stakeholder theory

KW - agency theory

KW - gender diversity

UR - https://www.mendeley.com/catalogue/08f55d7c-6701-3e7d-be2c-3af306a9aaea/

U2 - 10.22495/cocv18i2art2

DO - 10.22495/cocv18i2art2

M3 - Journal articles

VL - 18

SP - 20

EP - 39

JO - Corporate Ownership & Control

JF - Corporate Ownership & Control

SN - 1727-9232

IS - 2

ER -