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Does reduced tax avoidance affect CSR? Evidence from a Quasi-natural experiment in China

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  • Zhu, Danyu
  • Luo, Zijun
  • Qin, Han

Abstract

Using the staggered implementation of the Golden Tax Project III in China, this paper finds that firms exposed to stricter tax supervision reduce their corporate social responsibility. The potential mechanism is that the implementation of the Golden Tax Project III mitigates firms' potential reputation risk and also reduces their available resources, thus alleviating the motivation and ability of corporate social responsibility. This conclusion remains after a series of robustness tests. In addition, the impact is more pronounced in firms with poor corporate governance and regions with higher supervision quality and informatization levels. Our findings align with the risk management theory, supplementing new evidence for the debate on the association between tax avoidance and corporate social responsibility.

Suggested Citation

  • Zhu, Danyu & Luo, Zijun & Qin, Han, 2025. "Does reduced tax avoidance affect CSR? Evidence from a Quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 479-493.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:479-493
    DOI: 10.1016/j.eap.2024.12.018
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    More about this item

    Keywords

    Tax avoidance; Corporate social responsibility; Golden tax project III;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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