Corporate Social Responsibility, Tax Behavior, and Institutional Context: An Empirical Analysis

Abstract

ABSTRACT This study investigates the relationship between corporate social responsibility (CSR) and corporate tax avoidance (TA), incorporating the moderating effects of formal and informal institutions, including political, legal, and cultural systems. Analyzing a dataset of 1552 firms from the MSCI Developed and Emerging indices across 45 countries from 2010 to 2019, the findings reveal that higher CSR performance is associated with reduced TA behavior. This relationship is significantly influenced by a country's institutional environment, with firms in highly corrupt settings and non‐common law (civil law) countries demonstrating less TA under high CSR engagement. Furthermore, national cultural dimensions—such as power distance, uncertainty avoidance, and individualism—emerge as critical moderators. These results highlight the importance of institutional contexts in shaping the CSR‐TA nexus. The study offers theoretical insights into institutional theory and practical implications for managers, investors, and policymakers advocating for socially responsible tax practices. The robustness of findings is affirmed through alternative TA measures.

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