Overconfident CEOs, Corporate Social Responsibility & Tax Avoidance: Evidence from China

Panagiotis Karavitis, Pantelis Kazakis and Tianyue Xu

Working Papers from Business School - Economics, University of Glasgow

Abstract: CEO overconfidence is a significant factor in corporate decisions. We investigate whether CEO overconfidence affects the relationship between corporate social responsibility (CSR) and tax avoidance using a dataset of Chinese listed companies. We find that firms with higher CSR scores avoid paying more taxes. This relationship is moderated, however, by CEO overconfidence. While firms with higher CSR scores avoid more taxes on average, those led by overconfident CEOs avoid less. We contend that overconfident CEOs are less likely to use CSR strategically to mitigate risk. Our conclusion stands up to a battery of sensitivity tests, including the use of CSR subdimensions.

Keywords: Corporate social responsibility; Tax avoidance; CEO overconfidence (search for similar items in EconPapers)
JEL-codes: G30 H26 (search for similar items in EconPapers)
Date: 2021-11
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-cna and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2021_18

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