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Corporate Social Responsibility, Institutional Environments, and Tax Avoidance: Evidence from a Subnational Comparison in China

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  • Lin, Kenny Z.
  • Cheng, Suwina
  • Zhang, Fang

Abstract

We examine the association between mandatory corporate social responsibility (CSR) disclosure and economic contribution (tax payments) in China, where we expect this association to be affected by a region's institutional attributes. Exploiting a dataset that shows cross-regional variations in institutions, we find that in regions with lower institutional quality, firms claiming to be socially responsible actually avoid taxes, whereas CSR disclosure in other regions is more aligned with the social responsibility aspect of tax compliance. Our study contributes to the literature by demonstrating that in the absence of proper institutions, CSR disclosure is likely to remain a form of window dressing.

Suggested Citation

  • Lin, Kenny Z. & Cheng, Suwina & Zhang, Fang, 2017. "Corporate Social Responsibility, Institutional Environments, and Tax Avoidance: Evidence from a Subnational Comparison in China," The International Journal of Accounting, Elsevier, vol. 52(4), pages 303-318.
    • Handle: RePEc:eee:accoun:v:52:y:2017:i:4:p:303-318
    DOI: 10.1016/j.intacc.2017.11.002
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    More about this item

    Keywords

    Business ethics and social responsibility; Institutions; Tax avoidance; Transition economies;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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