A Review of Corporate Social Responsibility and Reputational Costs in the Tax Avoidance Literature

94 Pages Posted: 18 Feb 2021 Last revised: 30 Jul 2021

See all articles by Kimberly S. Krieg

Kimberly S. Krieg

University of San Diego - Department of Accountancy

John Li

Ryerson University

Date Written: July 4, 2021

Abstract

In recent years, academic researchers, policymakers, and the public have increasingly focused on the tax avoidance behavior of corporations. At the same time, firms are increasingly pressured to incorporate corporate social responsibility (CSR) into their decision making, leading to heightened academic interest in CSR. Given that opponents of corporate tax avoidance often argue that avoiding tax is socially irresponsible, we review the growing literature surrounding this issue. We begin with a theoretical review of how corporate tax avoidance fits into the CSR framework. We then review the empirical evidence on the interrelationship between CSR and firm reputation in the tax avoidance literature. We frame our review around three questions: (1) do firms view tax avoidance as a CSR issue? (2) do stakeholders view tax avoidance as socially irresponsible, leading to reputational costs of tax avoidance? and (3) do firms change their tax avoidance behavior due to fear of these reputational consequences? Throughout our review, we provide discussions on the state of the current literature and offer suggestions for future research opportunities.

Keywords: corporate social responsibility, corporate tax avoidance, tax aggressiveness, corporate culture, reputational costs

JEL Classification: H25, H32, M14, M41, M48

Suggested Citation

Krieg, Kimberly S. and Li, John, A Review of Corporate Social Responsibility and Reputational Costs in the Tax Avoidance Literature (July 4, 2021). Available at SSRN: https://ssrn.com/abstract=3776441 or http://dx.doi.org/10.2139/ssrn.3776441

Kimberly S. Krieg (Contact Author)

University of San Diego - Department of Accountancy ( email )

223 Olin Hall
5998 Alcalá Park
San Diego, CA
United States

John Li

Ryerson University ( email )

350 Victoria Street
Toronto, Ontario M5B 2K3
Canada

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