The Association Between Corporate Social Responsibility Disclosure and Tax Avoidance: Evidence from Malaysia

Proceedings of ‏The 4th International Conference on Business, Management and Economics

Year: 2020

DOI: https://www.doi.org/10.33422/4th.icbmeconf.2020.12.52

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The Association Between Corporate Social Responsibility Disclosure and Tax Avoidance: Evidence from Malaysia

Eko Budi Santoso, Kezia Laturette,and Stanislaus Adnanto Mastan

ABSTRACT: 

Social responsibility is an interesting topic because it is an important part of the company’s strategy to increase its value in the eyes of investors. By increasing awareness of social responsibility, companies disclose activities to gain recognition as an ethically responsible company in their business practices. However, some research results in developing countries show that social responsibility disclosure can also be used as a tool to cover up corporate financial fraud. This study aims to examine whether companies that actively disclose their social responsibility also behave ethically in their financial aspects. More specifically, this study investigates whether companies with good social responsibility also behave responsibly in the aspect of taxation by reducing tax avoidance practices. This research uses a sample of publicly traded companies listed on the Malaysian stock exchange for the period 2014-2019 that published sustainability reports. The results of this study indicate that corporate social responsibility disclosure is negatively associated with tax avoidance.

Keywords: CSR disclosure, tax aggressiveness, business ethics.