Does social capital constrain firms’ tax avoidance?
| Autor: | Antonio Parbonetti, Michele Fabrizi, Elisabetta Ipino, Justin Chircop |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
Labour economics
Double taxation 050208 finance Social norm Management and Accounting (all) Social Capital Tax aggressiveness Tax avoidance Business Management and Accounting (all) Social Sciences (miscellaneous) 05 social sciences Social environment Social Welfare 050201 accounting General Business Management and Accounting 0502 economics and business Corporate social responsibility Business Social responsibility Corporate tax Social capital |
| Zdroj: | Social Responsibility Journal. 14:542-565 |
| ISSN: | 1747-1117 |
| DOI: | 10.1108/srj-08-2017-0157 |
| Popis: | Purpose This paper aims to investigate whether the level of social capital of the region in which a firm is headquartered affects its tax avoidance activities. Social capital can be defined as the mutual trust in society and literature shows that firms headquartered in high social capital regions exhibit higher level of corporate social responsibility. Recent research suggests that some stakeholders consider tax avoidance as a socially irresponsible and illegitimate activity, whereas others deem corporate tax payments as detrimental to social welfare because they hurt economic development. Building on this debate, the relationship between social capital and tax avoidance is empirically investigated. Design/methodology/approach A sample of 52,962 firm-year observations over the period 1990-2014 was used to empirically investigate the relationship between social capital and tax avoidance. Findings Consistent with the idea that managers consider corporate tax payments as a socially responsible action, evidence was found that firms headquartered in areas with high social capital engage significantly less in tax avoidance activities. It was also documented that the negative impact of social capital on tax avoidance is stronger in the presence of high religiosity, high corporate performance and lower sensitivity of CEO’s compensation to stock volatility. Originality/value This paper extends research on social capital and improves the understanding of the effect of the social environment on managerial decision. Importantly, by studying the relationship between social capital and tax avoidance, the authors add to the recent debate on companies’ perception of the desirability of tax avoidance activities from a social viewpoint. |
| Databáze: | OpenAIRE |
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