How Does Taxation Affect Corporate Social Responsibility? Evidence from a Korean Tax Reform
Hyejin Park,
Jiyoon Lee () and
Jewon Shin ()
Additional contact information
Jiyoon Lee: Yonsei University
Jewon Shin: Yonsei University
Journal of Business Ethics, 2024, vol. 192, issue 4, No 6, 745-774
Abstract:
Abstract We examine the effects of taxes on Corporate Social Responsibility (CSR). Employing a tax reform in Korea that imposed a new tax on cash retention, we find that treated firms improved CSR performance after the tax reform was enacted. This result is driven by improvement in environmental and social performance. Moreover, the observed improvement is more pronounced in treated firms that face less severe financial constraints, are afforded fewer investment opportunities, feature large foreign ownership stakes, and employ stronger corporate governance mechanisms. The results suggest that tax increases lead to an increase in CSR investment and the magnitude of the increase depends on firm-level characteristics. As such, our results support the tax-strategic view of CSR in a country that has been a latecomer in incorporating CSR practices into business operations.
Keywords: CSR; Tax management; Environmental; Social and Governance (ESG) (search for similar items in EconPapers)
JEL-codes: G30 G32 G38 M14 (search for similar items in EconPapers)
Date: 2024
References: Add references at CitEc
Citations:
Downloads: (external link)
http://link.springer.com/10.1007/s10551-023-05536-4 Abstract (text/html)
Access to full text is restricted to subscribers.
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:kap:jbuset:v:192:y:2024:i:4:d:10.1007_s10551-023-05536-4
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10551/PS2
DOI: 10.1007/s10551-023-05536-4
Access Statistics for this article
Journal of Business Ethics is currently edited by Michelle Greenwood and R. Edward Freeman
More articles in Journal of Business Ethics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().