The effect of corporate social responsibility on tax avoidance and earnings management: The moderating role of political connections

Indriati Siti Pratiwi, Sylvia Veronica Siregar

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)

Abstract

This study aims to examine the effect of CSR towards tax avoidance and earnings management practices as well as the role of political connections as moderating variable. This study finds evidence that CSR has a positive effect toward tax avoidance, real earnings management, and aggregate earnings management. The results indicate that broader CSR disclosure is done to cover opportunistic behaviors and maintain the legitimacy and corporate image in the eyes of the stakeholders. However, for political connections, it is generally not proven to have a significant role in moderating the effect of CSR towards tax avoidance and earnings management practices. This research is expected to provide input to users of financial statements to be more careful in assessing company ethics. Besides, the government is also expected to make regulations to ensure that the content of disclosures made by the company is not just a green wash statement for stakeholders.

Original languageEnglish
Pages (from-to)229-248
Number of pages20
JournalInternational Journal of Business
Volume24
Issue number3
Publication statusPublished - 1 Jan 2019

Keywords

  • CSR
  • Earnings management
  • Political connections
  • Tax avoidance

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