Complements, substitutes or neither? A review of the relation between corporate social responsibility and corporate tax avoidance

• Published in: Journal of accounting literature 2023-10, Vol.45 (3), p.474-496
• Main Authors: Jemiolo, Shannon, Farnsel, Curtis
• Format: Article
• Language: English
• Subjects: Accounting; Behavior; Corporate taxes; Literature reviews; Profitability; Profits; Social responsibility; Society; Stakeholders; Stockholders; Tax avoidance; Taxation
• ISSN: 0737-4607; 2452-1469
• DOI: 10.1108/JAL-12-2021-0018

PurposeThis review analyzes the existing theoretical and empirical research on the relation between corporate taxation and corporate social responsibility (CSR). By synthesizing the current literature regarding the directional relation between tax avoidance and CSR, the authors are able to identify areas where further research on this relation should be targeted to maximize the public interest.Design/methodology/approachThe authors conduct a literature review of articles published in leading journals in the fields of accounting, finance and management. Reputable working papers are included to support emerging trends in the research and suggest meaningful paths forward.FindingsThe literature reveals a complex relation between corporate tax avoidance and CSR. The published research offers theoretical and empirical support for both a substitutive and a complementary directional relation. An actionable takeaway from this review is that corporate taxation must be considered jointly with CSR when seeking to maximize the public interest.Originality/valueThe authors find a rapid influx of research over the past decade that explores the complex directional relation between corporate tax avoidance and CSR. This review will be useful to researchers that are interested in moving beyond a directional characterization of this relation. By synthesizing both established and emerging literature, the authors provide a foundation and direction for future research to examine issues that may directly inform tax or firm policies to increase overall stakeholder welfare.