Corporate philanthropy as a response to greater tax enforcement

Le Zhao

Accounting and Business Research, 2024, vol. 54, issue 1, 33-54

Abstract: I examine whether firms engage in more corporate philanthropy in response to greater tax enforcement. Using the introduction of a new tax administration system as a proxy for increased tax enforcement, I find stricter tax enforcement results in more corporate donations, especially for tax aggressive firms. These results are concentrated in firms that have a greater demand for political connections or firms that have higher potential reputational costs. In summary, this study suggests that firms strategically use corporate philanthropy to respond to increased tax enforcement.

Date: 2024
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DOI: 10.1080/00014788.2022.2149456

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