Does rising corporate social responsibility promote firm tax payments? New perspectives from a quantile approach

Van, Huong Vu; Ly, Kim Cuong

Abstract

Studies of the linkage between CSR and firms' tax payment often use mean regression strategies and focus on developed economies. Using panel data from Vietnamese firms, this study finds that CSR has insignificant effects on firm tax payments when applying fixed-effect instrumental variable estimations. Using a quantile approach, however, this paper finds that CSR improves firm tax payment at a higher percentile but is negatively linked to enterprises with low tax payment, a result driven by several mechanisms. First, high adherence to CSR increases firms' compliance with the law. Also, although high adherence to CSR does not immediately promote transparency in the business environment, it does improve firm profitability and value added. This suggests that in the absence of effective institutions, firms can engage in the effort against tax avoidance and promote tax payment by applying CSR practices.

Citation

Van, H. V., & Ly, K. C. (2021). Does rising corporate social responsibility promote firm tax payments? New perspectives from a quantile approach. International Review of Financial Analysis, 77, Article 101857. https://doi.org/10.1016/j.irfa.2021.101857

• Journal Article Type: Article
• Acceptance Date: Jul 28, 2021
• Online Publication Date: Aug 2, 2021
• Publication Date: 2021-10
• Deposit Date: Aug 26, 2021
• Publicly Available Date: Feb 3, 2023
• Journal: International Review of Financial Analysis
• Print ISSN: 1057-5219
• Electronic ISSN: 1873-8079
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 77
• Article Number: 101857
• DOI: https://doi.org/10.1016/j.irfa.2021.101857
• Keywords: CSR; quantile approach; tax payment; instrumental variable regression JEL Classification: G3; H2
• Public URL: https://nottingham-repository.worktribe.com/output/6093487
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S1057521921001873