The Effect of Corporate Social Responsibility on Tax Avoidance Behavior: The Moderating Role of Institutional Quality

Kathleen Emmanuel, Prof. Ted Welten

2023 | Skripsi | AKUNTANSI

Penelitian ini mengeksplorasi efek moderasi kualitas institusional terhadap hubungan antara corporate social responsibility (CSR) perusahaan dan tax avoidance. Dengan menerapkan teori pemangku kepentingan dan teori arti-penting pemangku kepentingan, hipotesis pertama mengajukan hubungan positif antara CSR dan tax avoidance. Lebih lanjut, hipotesis kedua memperkirakan bahwa semakin buruk kualitas institusional suatu negara, semakin kuat hubungan positif antara CSR dan tax avoidance. Berdasarkan model regresi efek tetap pada sampel 987 observasi tahun perusahaan di kawasan Asia Timur dari tahun 2017 hingga 2021, temuan menunjukkan hal sebaliknya. Bukti menunjukkan bahwa kualitas institusional yang lebih buruk memperkuat hubungan negatif antara CSR dan tax avoidance, sedangkan kualitas institusional yang lebih kuat melemahkan hubungan ini. Hasil ini signifikan ketika pengukuran tax avoidance jangka pendek menggunakan cash-effective tax rate (CETR) dan GAAP effective tax rate (GETR), sementara itu tidak signifikan ketika five-year cash effective tax rate (LCETR) diterapkan. Hubungan negatif menunjukkan bahwa perusahaan-perusahaan Asia Timur menganggap praktik tax avoidance bertentangan dengan praktik CSR. Oleh sebab itu, peningkatan kualitas institusional perlu diiringi dengan penegakan peraturan CSR oleh pembuat kebijakan dan pemerintah untuk mengurangi kemungkinan perusahaan melakukan tax avoidance.

This study explores the moderating effect of institutional quality on the relationship between corporate social responsibility (CSR) and tax avoidance. By applying the stakeholder theory and stakeholder salience theory, the first hypothesis proposes a positive relationship between CSR and tax avoidance. Furthermore, the second hypothesis expects that the poorer the institutional quality a country has, the stronger the positive relationship between CSR and tax avoidance. Based on the fixed effects regression model on a sample of 987 firm-year observations in the East Asia region from 2017 to 2021, the findings suggest the contrary. The evidence suggests that poorer institutional quality strengthens the negative relationship between CSR and tax avoidance, while stronger institutional quality weakens this relationship. The result is significant when both  short-term tax avoidance measurements of cash-effective tax rate (CETR) and GAAP effective tax rate (GETR), while it is insignificant when five-year cash effective tax rate (LCETR) is applied. The negative relationship suggest that East Asian firms regard tax avoidance practices goes against the practice of CSR. Therefore, the improvement of institutional quality needs to be complemented by the enforcement of CSR regulation by policymakers and governments to reduce the likelihood of firms engaging in tax avoidance. 

Kata Kunci : Corporate Social Responsibility, Tax Avoidance, Effective Tax Rate, Institutional Quality, National Governance