CSR and tax aggressiveness of Malaysian listed companies: evidence from an emerging economy

Nirmala Devi Mohanadas · Abdullah Sallehhuddin Abdullah Salim · Kwee Pheng Lim

49 citations0/0 files storedSocial Responsibility Journal

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Corporate Taxation and Avoidance Taxation and Legal Issues Corporate Social Responsibility Reporting

Abstract

Purpose This study aims to examine how corporate social responsibility (CSR) performance and corporate tax aggressiveness relate in Malaysia, an emerging economy in Southeast Asia. It also seeks to analyse how CSR performance in community, environment, marketplace and workplace themes relate to the tax aggressiveness of listed companies in this country. Design/methodology/approach This study analyses 182 companies listed in the Main Market of Bursa Malaysia from 2010 to 2012 using fixed-effects panel regression and ordinary least square regression. It uses current effective tax rate as a proxy for corporate tax aggressiveness and measures CSR performance using specially developed CSR performance disclosure index. Findings This study finds no statistical support that CSR performance is related to corporate tax aggressiveness in Malaysia. Similarly, there are no statistically significant relationships between environment-related and marketplace-related CSR performance and corporate tax aggressiveness. Nevertheless, community-related CSR performance has significant negative relationship with corporate tax aggressiveness. Workplace-related CSR performance meanwhile has significant positive relationship with corporate tax aggressiveness. Originality/value This study expands the current literature's focus on developed economies by examining the relationship between CSR and corporate tax aggressiveness in the setting of an emerging Asian economy, i.e. Malaysia. It is also the first empirical study focussing on this relationship among Malaysian listed companies.

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References

2010Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting 2010A review of tax research 1996Some determinants of social and environmental disclosures in New Zealand companies 2005The impact of culture and governance on corporate social reporting 2006The role of environmental disclosures as tools of legitimacy: A research note 2002Culture, Corporate Governance and Disclosure in Malaysian Corporations 1998Managing Public Impressions: Environmental Disclosures in Annual Reports 2000Methodological issues ‐ Reflections on quantification in corporate social reporting content analysis

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