Tax avoidance and corporate social responsibility: you can't do both, or can you?

By Lutz Preuss. 2010

143 citations recorded by the source corpus.

– The payment of taxes is both a crucial corporate contribution to society and essential to good governance; but it is an under‐researched aspect of corporate social responsibility (CSR). Hence this paper first seeks to examine whether companies that engage in tax avoidance through locating their headquarters in tax havens – or Offshore Finance Centres (OFCs) – make any claims to act socially responsibly. If so, the paper, second, aims to investigate how being based in an OFC impacts on the firm's commitment to key organisational stakeholders., – In the light of the sensitivity of the issue, the research questions are studied through an analysis of the content of codes of conduct that have been adopted by a sample of firms based in OFCs. The results are compared with a sample of US firms., – OFC‐based firms do indeed make claims that they engage in responsible business practices. However, the commitments by OFC‐based companies vis‐a‐vis key stakeholders fall in almost all cases short of those made by the sample of US firms., – With regard to CSR theory, the paper shows how organisational legitimacy is the result of a complex interaction between strategic legitimacy efforts by OFC‐based companies and isomorphic processes in the wider social system. In terms of CSR practice, the paper argues that claims to acting socially responsibly by firms that do not even fully meet their economic responsibilities to society may, in the longer term, undermine the very idea of CSR.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/4be20f91fe903d203415094983aa4ca43ece7ffc

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Citations in the corpus

Outside Directors, Corporate Social Responsibility Performance, and Corporate Tax Aggressiveness: An Empirical Analysis (2016, background): “Legitimacy, stakeholder, and risk-management theories advocate that firms exist within society by constantly managing risk and reputation (e.g., Godfrey et al., 2009; Gray, Kouhy, & Lavers, 1995; Lanis & Richardson, 2013; Preuss, 2010, 2012).”
Corporate Social Responsibility, Institutional Environments, and Tax Avoidance: Evidence from a Subnational Comparison in China (2017, methodology): “…with poor institutions, we observe a divergence between the level of CSR disclosure and the payment of tax, which apparently arises from the use of CSR reports primarily as an image- or risk-management tool (Godfrey, 2005; Hoi et al., 2013; Minor & Morgan, 2011; Preuss, 2010; Sikka, 2010).”
Does Corporate Social Responsibility Affect Corporate Tax Aggressiveness (2015, background): “Carroll and Joulfaian (2005), Preuss (2010) and Sikka (2010) note that some firms claiming to be socially responsible are also engaged in tax aggressive activities.”
Going to Haven? Corporate Social Responsibility and Tax Avoidance (2019, methodology): “…reasons: First, this is one of the most popular ways for multinational firms to lower their effective tax payments.5 Second, with the exception of Preuss (2010, 2012), most of the empirical studies in the CSR and tax avoidance literature use different measures of tax avoidance such as effective…”
Do Socially Responsible Firms Pay More Taxes (2016, result): “Qualitative evidence presented in Preuss (2010) and Sikka (2010) is also consistent with this argument.”
Foreign investors' interests and corporate tax avoidance: Evidence from an emerging economy (2015, background): “Thus, for an organization to be legitimate , it needs to fulfil its social responsibility to the host community economically by paying taxes (Preuss, 2010; Williams, 2007a).”
Tax avoidance, corporate governance, and corporate social responsibility: The case of the Egyptian capital market (2020, background): “…increase CSR disclosure in order to offset negative perceptions associated with low tax payments (Landry et al., 2013; Lanis & Richardson, 2013; Preuss, 2010). n a We extend the existing studies by examining whether there is a complementary or a substitutive relationship between tax avoidance…”