Corporate Social Responsibility, Tax Avoidance, and Earnings Performance

Abstract

I investigate the influence of pretax earnings performance on the relation between corporate social responsibility (CSR) and tax avoidance. Prior studies of the relation between CSR and tax avoidance find mixed results. Based on slack resource theory (Penrose 1959), I predict and find that the relation between CSR and tax avoidance is moderated by earnings performance. The evidence shows that a lack of social responsibility is positively associated with tax avoidance in firms with low current or future earnings performance, but this effect is diminished when current or future earnings performance is high. There is some evidence that corporate social responsibility is positively associated with tax avoidance when current or future earnings performance is low but, again, the effect disappears when current or future earnings performance is high. Overall, my results suggest that attention to the demands of non-shareholder stakeholders is curtailed when firms face scarce resources.

Corporate Tax Payments and Corporate Social Responsibility: Complements or Substitutes? Empirical Evidence from Europe

“…Recent empirical studies by Lanis and Richardson [3,17]; Davis et al [1]; Huseynov and Klamm [4]; Hoi et al [5]; Landry et al [6] and Watson [7] differ from ours in either the sample or the CSR measures used.…”

“…This suggests in line with the risk management view that CTP and CSR of European public firms act as substitutes. We also examine whether the relation between CSR and CTP is moderated by current earnings performance as indicated by Watson [7]. We do not find that the relation between these two constructs is moderated by current earnings performance.…”

“…Landry et al [6] conclude that tax behaviours are not necessarily aligned with CSR. Last, Watson [7] examines the effects of earnings performance on the relationship between CSR and corporate tax avoidance. The study analyses a sample of 1,929 US firms from 2003 to 2009.…”

Kualitas Corporate Social Responsibility dan Penghindaran Pajak dengan Kinerja Laba Sebagai Moderator

“…Namun bisa saja terjadi pengungkapan yang dilakukan melebihi aktivitas CSR yang nyata; (2) subjektivitas dalam proses scoring. (Gunawan, 2009 Pengaruh kualitas CSR terhadap penghindaran pajak semakin menarik diteliti karena Watson (2014) menemukan bahwa semakin tinggi kualitas CSR perusahaan, semakin tinggi penghindaran pajak yang dilakukan perusahaan, dalam kondisi kinerja laba yang rendah. Namun pengaruh keduanya tidak terjadi dalam kondisi kinerja laba tinggi.…”

“…Alasan yang pertama sama dengan yang telah diungkapkan sebelumnya bahwa kinerja laba yang tinggi menyebabkan terjadi kelebihan pembayaran pajak pada tahun-tahun berikutnya, sehingga perusahaan harus melakukan restitusi pajak dan menjalani pemeriksaan pajak yang membutuhkan waktu yang lama di Indonesia (12 bulan). Mengapa penelitian Watson (2014) di USA berbeda dengan hasil penelitian ini di Indonesia? Ada beberapa perbedaan mendasar dalam mekanisme restitusi di Indonesia dan USA, antara lain di USA restitusi pajak membutuhkan waktu sekitar 3 minggu bila pengajuan lewat pos dan waktu yang lebih pendek bila diajukan melalui internet.…”