Does Tax‐Aggressive Behavior Motivate More CSR Engagement?

Xin Wang, Kam Fong Chan, Millicent Chang, Yuan George Shan and Joey W. Yang

Economics and Politics, 2025, vol. 37, issue 2, 669-684

Abstract: Using an international sample of listed companies from 36 countries, we investigate whether firms' engagement in tax‐aggressive behavior drives them to increase their corporate social responsibility (CSR) and environmental, social, and governance (ESG) activities. Consistent with the reputation risk mitigation theory, our results show that U.S. and Canadian firms ramp up their ESG activities 4 years after engaging in tax‐aggressive practices, aligning with the typical duration for the IRS (Internal Revenue Service) investigations. In contrast, firms in other countries act sooner, within 2–3 years. Further analysis shows that firms in countries with stringent law enforcement, and those adopting International Financial Reporting Standards, are less likely to enhance CSR/ESG activities following aggressive tax policies. These findings highlight the significant influence of regulatory and disclosure environments in shaping corporate behavior in tax policies.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/ecpo.12333

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:ecopol:v:37:y:2025:i:2:p:669-684

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0954-1985

Access Statistics for this article

Economics and Politics is currently edited by Peter Rosendorff

More articles in Economics and Politics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().