Corporate Social Responsibility and Tax Aggressiveness: An Examination of Unrecognized Tax Benefits

Abstract:     
I examine the relationship between corporate social responsibility (CSR) and tax aggressiveness using unrecognized tax benefit (UTB) disclosures. The empirical results of this study indicate that socially irresponsible firms have larger total UTBs than socially conscious firms, indicating greater tax aggressiveness. I interpret the results to be consistent with socially conscious firms’ CSR reputations attracting consumers and investors with similar values or social norms, thereby discouraging tax aggressiveness. Meanwhile, socially irresponsible firms are not as constrained by social norms, so they may pursue aggressive tax strategies without fear of stakeholder retribution. Overall, the evidence is consistent with CSR reducing tax aggressiveness.

Number of Pages in PDF File: 39

working papers series