TY - JOUR
T1 - Corporate Social Responsibility and Tax Avoidance
T2 - The Effect of Shareholding Structure - Evidence from the UK
AU - Sarhan, Ahmed
PY - 2023/2/9
Y1 - 2023/2/9
N2 - During their 47th G7 summit in June 2021, the largest economies agreed to combat tax evasion. This paper investigates tax avoidance phenomenon by examining the possible moderation effect of shareholding structure (internal and external shareholdings), as a corporate governance mechanism, on the relationship between corporate social responsibility (CSR) and tax avoidance. Using a sample of FTSE350 non-financial listed firms from 2002 to 2016, I find that institutional shareholding dampens the positive relationship between firms’ social responsibility and tax citizenship. However, the association between corporate social and tax citizenship is magnified for firms with entrenched managerial shareholding. The empirical findings inform tax policymakers and regulators about the need to consider the corporate shareholding structure that magnifies/dampens the tax avoidance risk. Generally, the findings hold for alternative measures of tax avoidance and CSR commitment, Two-Stage Least Squares and Tobit regressions, and additional control variables.
AB - During their 47th G7 summit in June 2021, the largest economies agreed to combat tax evasion. This paper investigates tax avoidance phenomenon by examining the possible moderation effect of shareholding structure (internal and external shareholdings), as a corporate governance mechanism, on the relationship between corporate social responsibility (CSR) and tax avoidance. Using a sample of FTSE350 non-financial listed firms from 2002 to 2016, I find that institutional shareholding dampens the positive relationship between firms’ social responsibility and tax citizenship. However, the association between corporate social and tax citizenship is magnified for firms with entrenched managerial shareholding. The empirical findings inform tax policymakers and regulators about the need to consider the corporate shareholding structure that magnifies/dampens the tax avoidance risk. Generally, the findings hold for alternative measures of tax avoidance and CSR commitment, Two-Stage Least Squares and Tobit regressions, and additional control variables.
KW - Corporate social responsibility
KW - Tax avoidance
KW - Shareholding structure
KW - The UK
U2 - 10.1057/s41310-023-00172-w
DO - 10.1057/s41310-023-00172-w
M3 - Article
JO - International Journal of Disclosure and Governance
JF - International Journal of Disclosure and Governance
SN - 1741-3591
ER -