Open AccessCSR and corporate taxes: Substitutes or complements?
Author(s) -
Lukas Timbate
Publication year - 2021
Publication title -
business research quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.995
H-Index - 26
eISSN - 2340-9444
pISSN - 2340-9436
DOI - 10.1177/23409444211002218
Subject(s) - corporate social responsibility , payment , business , corporate tax , competitive advantage , accounting , public economics , economics , marketing , tax avoidance , double taxation , finance , public relations , political science
There is a debate in academia and the business world on whether tax payments should be considered part of firms’ social responsibility. Existing literature provides conflicting evidence on the relationship between corporate tax payments and corporate social responsibility (CSR). Borrowing a concept from a behavioral theory of the firm (BTOF), this study attempts to present a more refined model on the relationship between the two. The results in this study reveal that as firms’ performance rises further above their aspiration level, they are less likely to show better CSR performances and are also less likely to avoid taxes. Firms performing just above their aspiration level show higher CSR performances and firms performing nearby (both below and above) their aspiration level avoid more taxes. In conclusion, firms’ CSR and tax payment decisions are related to the desire to meet or beat an aspiration level or sustain competitive advantage than being ethical or unethical. JEL CLASSIFICATION M14; H26