Valuation Implications of Socially Responsible Tax Avoidance: Evidence from the Electricity Industry

2020 ◽  
Author(s):  
Kerry Inger ◽  
James Stekelberg
Keyword(s):  
Tax Avoidance ◽  
Electricity Industry ◽  
Socially Responsible

scholarly journals Effect of Corporate Social Responsibility on Tax Avoidance in China

2021 ◽  
Vol 8 (9) ◽  
pp. 72-75
Author(s):  
Tong Chen ◽  
◽  
Maisarah Mohamed Saat ◽  
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Tax Avoidance ◽  
Effective Tax Rate ◽  
Socially Responsible ◽  
Tax Rate ◽  
The Public ◽  
Chinese Listed Companies ◽  
Aggressive Tax Avoidance ◽  
Corporate Social

Corporate social responsibility (CSR) has aroused heated discussion in recent years. The public generally believe that the enterprises with good CSR performance will not be involved in aggressive tax avoidance issues. However, as several famous socially responsible technology companies were found to be involved in aggressive tax avoidance, the association between those two variables has been doubted. This paper analyzes the effect of CSR on tax avoidance with the evidence of Chinese listed companies from 2016 to 2020. The finding is that good CSR performance leads to an increase in effective tax rate. In other words, the higher the CSR report score, the higher tax payment and the lower tendency in tax avoidance.

Corporate social responsibility and tax avoidance: the case of French companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Souhir Abid ◽  
Saîda Dammak
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Audit Quality ◽  
Tax Avoidance ◽  
Least Square ◽  
Socially Responsible ◽  
High Quality ◽  
Content Type ◽  
Aggressive Tax Avoidance ◽  
Corporate Social

Purpose The purpose of this paper is to shed light on the effect of tax avoidance on corporate social responsibility performance. It also investigates whether audit quality affects tax avoidance practices by socially responsible performance. Design/methodology/approach Based on a sample of French non-financial companies over the period 2005 to 2016, this paper uses panel data regressions. The authors apply generalized least square panel regression to overcome autocorrelation and heteroscedasticity problems. For further robustness, this paper runs instrumental variable regressions using the three-stage instrument variable method (three-stage least square). Findings The results show that firms with high CSR scores are more likely to engage in aggressive tax avoidance. The findings also show that firms audited by high-quality auditors are more likely to get involved in CSR for hedging against the potential consequences of aggressive tax avoidance practices. Research limitations/implications The findings are consistent with risk management theory, which suggests that firm’s hedge against any reputational risks that might arise from avoiding taxes by engaging more in CSR. Practical implications Results have implications for policymakers in that CSR firms audited by high-quality auditors may engage in CSR to overcome any negative reactions that could be caused as a result of tax avoidance. Thus, they need to be cautious about managers’ opportunistic behavior and enhance monitoring to enforce social compliance and to be tax compliant. Originality/value This paper extends the existing literature by examining the effect of audit quality on the relationship between CSR performance and corporate tax avoidance. Audit quality is deemed to be an important governance feature that is likely to constraint managerial opportunistic behaviors. Audit quality, along with CSR performance, are associated with a higher level of tax avoidance.

Socially Responsible Investment Funds and Corporate Tax Avoidance

2017 ◽  
Author(s):  
Thomas William Doellman ◽  
Fariz Huseynov ◽  
Tareque Nasser ◽  
Sabuhi H. Sardarli
Keyword(s):  
Tax Avoidance ◽  
Socially Responsible Investment ◽  
Corporate Tax ◽  
Socially Responsible ◽  
Investment Funds ◽  
Responsible Investment

scholarly journals Literature Review on the Association between Earnings Management and Corporate Social Responsibility

2020 ◽  
Vol 5 (1) ◽  
pp. 22-31
Author(s):  
Ruksana Parvin ◽  
Md. Sohel Rana ◽  
Shahpar Shams
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Firm Value ◽  
Ethical Issues ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Socially Responsible ◽  
Corporate Governance Practice ◽  
Corporate Social

This paper aims to give an overview of the existing literature on the Earnings Management (EM) and Corporate Social Responsibility (CSR) relationship in different countries. This paper reviews preceding studies concerned about EM, CSR and their relationship. Out of 23 works of literature, 11 studies found a negative relationship, 6 studies found a positive relationship, 2 studies found blended relationships in case of different situations and 4 studies found no connection between CSR and EM. Most of the results demonstrated that probably the socially responsible organizations have a negative correlation with EM practice. The types of the relationship depend on cause-effect relationship, information asymmetry, how can a company use resources, awareness on environmental issues, awareness on ethical issues, tax avoidance tendency, corporate governance practice, nature of the firm, political environment, opportunistic incentive, and stakeholder capital, manager's psychology, etc. Relationships between EM and CSR influence on earnings quality, firm performance, and firm value. 

scholarly journals CSR and tax avoidance: A review of empirical research

2021 ◽  
Vol 18 (2) ◽  
pp. 20-39
Author(s):  
Jost Kovermann ◽  
Patrick Velte
Keyword(s):  
Literature Review ◽  
Empirical Research ◽  
Tax Avoidance ◽  
Socially Responsible ◽  
Csr Reporting ◽  
Bidirectional Relationship ◽  
Quantitative Results ◽  
Stable Association ◽  
Tax Payments ◽  
Corporate Social

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

Market Valuation Consequences of Avoiding Taxes While also Being Socially Responsible

2018 ◽  
Vol 31 (2) ◽  
pp. 75-94
Author(s):  
Kerry K. Inger ◽  
Brian Vansant
Keyword(s):  
Tax Avoidance ◽  
Equity Market ◽  
Shareholder Wealth ◽  
Data Availability ◽  
Market Valuation ◽  
Socially Responsible ◽  
Public Firms ◽  
The Public ◽  
Market Participants ◽  
Corporate Social

ABSTRACT In this study, we examine the effects of tax avoidance and Corporate Social Responsibility (CSR) activities on equity market valuation. Economic theory suggests that managers should avoid taxes through any legal means (Friedman 1970), and that CSR activities are of value to the extent that shareholder wealth is maximized (Hales, Matsumura, Moser, and Payne 2016). We hypothesize that while equity market participants may positively value both CSR and tax avoidance, these two actions are viewed as inconsistent with one another when engaged upon contemporaneously, where increased activity of one diminishes the value of the other. Results, using a sample of U.S. public firms during years 2000–2013, support our expectation and show a negative interaction between CSR and tax avoidance. A series of robustness checks provide additional evidence consistent with investors viewing CSR and tax avoidance as contradictory. JEL Classifications: G32; M41; M49; M410. Data Availability: Data are available from the public sources cited in the text.

scholarly journals The Effect of ESG Performance on Tax Avoidance—Evidence from Korea

2021 ◽  
Vol 13 (12) ◽  
pp. 6729
Author(s):  
Bo-Hyun Yoon ◽  
Jeong-Hwan Lee ◽  
Jin-Hyung Cho
Keyword(s):  
Corporate Governance ◽  
Financial Market ◽  
Corporate Culture ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Sample Period ◽  
Socially Responsible ◽  
Culture Theory ◽  
Income Difference

We analyzed whether a firm’s engagement in socially responsible activities, as measured by environmental, social, and corporate governance (ESG) scores, influences their tendency to avoid tax in the Korean financial market. We found a negative relationship between Korean firms’ ESG scores and tax avoidance in terms of book-tax income difference during the sample period between 2011 and 2017. This result implies that firms with good CSR performance would tend not to manipulate taxable profits, which is in line with corporate culture theory. More interestingly, this trend has become more apparent for chaebol-affiliated firms, a special type of Korean conglomerate, than non-chaebol firms.

scholarly journals Corporate Social Responsibility And Tax Avoidance: Evidence From Korean Firms

2017 ◽  
Vol 33 (6) ◽  
pp. 1059-1068 ◽  
Author(s):  
SungJong Park
Keyword(s):  
Economic Development ◽  
Corporate Social Responsibility ◽  
Social Services ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Least Square ◽  
Socially Responsible ◽  
Corporate Social ◽  
The Relationship

This study examines the relationship between corporate socially responsible (CSR) activities and tax avoidance using residual book-tax differences (BTD), year residual BTD and total BTD. Using a sample of 1,148 publicly listed Korean firms on Korean Stock Exchange (KSE) covering periods between 2004 and 2009 it finds that the firms with higher CSR activities are less likely to avoid taxes regardless which proxy of tax avoidance is used. This finding is confirmed with two stage least square (2SLS) method after accounting for endogeneity of CSR. It also tests how seven different CSR activities affect tax avoidance, and finds that social services, satisfaction of employees and contributions to economic development are negatively related to tax avoidance. Overall, the empirical results of this paper support the previous studies arguing the negative relationship between tax avoidance and CSR.

The role of the media in socially responsible investing

2020 ◽  
Vol 38 (4) ◽  
pp. 823-841 ◽  
Author(s):  
Shan Lei ◽  
Yafei Zhang
Keyword(s):  
Media Coverage ◽  
News Coverage ◽  
Negative Relationship ◽  
Tax Avoidance ◽  
Computer Assisted ◽  
Media Content ◽  
Socially Responsible ◽  
Content Type ◽  
Media Sentiment ◽  
The Impact

PurposeThis study aims to understand how media content and media sentiment in corporate social responsibility (CSR) news coverage affect investment performance, as reflected in the S&P 500 Environmental and Socially Responsible Index from 2010 to 2016.Design/methodology/approachComputer-assisted content analysis and sentiment analysis are employed to analyze 818 CSR-related newspaper articles from mainstream newspapers. Autoregressive model is used to comprehend socially responsible investment (SRI) performance.FindingsThis study reveals the impact of media content and media sentiment of CSR-related news articles on SRI. The authors’ findings indicate that such topics as recognition of a company's CSR contributions in CSR-related news articles are positively associated with SRI performance, whereas topics such as tax avoidance and environmental protection show a negative relationship with SRI performance. In addition, this study contributes to the authors’ understanding of framing bias in investment by confirming a significant positive association between an uncertain or constraining media sentiment and SRI performance, as well as a negative relationship between a litigious sentiment and SRI performance.Originality/valueThere has been limited attention to examining the effect of media coverage of CSR on the financial market. Since SRI is one of the most useful financial indices for SRIs, it is meaningful to explore the relationship between media coverage of CSR and SRI. To fill the research gap, this study specifically examines how media coverage of CSR-related issues is associated with SRI performance.

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