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

Huong Vu Van and Kim Cuong Ly

International Review of Financial Analysis, 2021, vol. 77, issue C

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.

Keywords: CSR; Quantile approach; Tax payment; Instrumental variable regression (search for similar items in EconPapers)
JEL-codes: G3 H2 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:77:y:2021:i:c:s1057521921001873

DOI: 10.1016/j.irfa.2021.101857

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