Corporate social responsibility disclosure and corporate social irresponsibility in emerging economies: Does institutional quality matter?

Ali Meftah Gerged, Kadmia Kehbuma , Eshani Beddewela

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The Panama Papers (2016), Paradise Leaks (2017), and Pandora Papers (2021) have revealed the extensive practice of corporate tax avoidance. Yet, the tax behavior of companies claiming to be 'socially responsible' has been less examined. This study examines the association between corporate social responsibility disclosure (CSRD) and tax avoidance, particularly in developing economies, focusing on Sub-Saharan Africa (SSA). By analyzing data from 600 firm-year observations across 13 SSA countries using panel quantile regression, we found a negative relationship between CSRD, which includes ethical, social, and environmental dimensions, and tax avoidance. This aligns with legitimacy theory, indicating that firms are increasingly adopting CSR transparency to meet societal expectations and gain stakeholder trust, avoiding socially irresponsible behaviors. Furthermore, the quality of national governance significantly moderates the CSRD-tax avoidance relationship, supporting the concept of institutional isomorphism. This evidence is valuable for professionals and policymakers and encourages further research to deepen and broaden these findings.
Original languageEnglish
Number of pages19
JournalBusiness Ethics, the Environment and Responsibility
Early online date23 Apr 2024
Publication statusE-pub ahead of print - 23 Apr 2024

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