Overconfident CEOs, Corporate Social Responsibility & Tax Avoidance: Evidence from China

51 Pages Posted: 15 Dec 2021

See all articles by Panagiotis Karavitis

Panagiotis Karavitis

University of Glasgow - Adam Smith Business School

Pantelis Kazakis

University of Glasgow - Adam Smith Business School

Tianyue Xu

University of Glasgow - Adam Smith Business School

Date Written: November 22, 2021

Abstract

CEO overconfidence is a significant factor in corporate decisions. We investigate whether CEO overconfidence affects the relationship between corporate social responsibility (CSR) and tax avoidance using a dataset of Chinese listed companies. We find that firms with higher CSR scores avoid paying more taxes. This relationship is moderated, however, by CEO overconfidence. While firms with higher CSR scores avoid more taxes on average, those led by overconfident CEOs avoid less. We contend that overconfident CEOs are less likely to use CSR strategically to mitigate risk. Our conclusion stands up to a battery of sensitivity tests, including the use of CSR sub-dimensions.

Keywords: Corporate social responsibility; Tax avoidance; CEO overconfidence

JEL Classification: G30, H26

Suggested Citation

Karavitis, Panagiotis and Kazakis, Pantelis and Xu, Tianyue, Overconfident CEOs, Corporate Social Responsibility & Tax Avoidance: Evidence from China (November 22, 2021). Available at SSRN: https://ssrn.com/abstract=3969369 or http://dx.doi.org/10.2139/ssrn.3969369

Panagiotis Karavitis (Contact Author)

University of Glasgow - Adam Smith Business School ( email )

University Avenue
Glasgow
Glasgow, West End G12 8QQ
United Kingdom

HOME PAGE: http://https://www.gla.ac.uk/schools/business/staff/panagiotiskaravitis/

Pantelis Kazakis

University of Glasgow - Adam Smith Business School ( email )

Adam Smith Business School
Gilbert Scott Building
Glasgow, Scotland G12 8QQ
United Kingdom

HOME PAGE: http://sites.google.com/site/panteliskazakis/home

Tianyue Xu

University of Glasgow - Adam Smith Business School ( email )

Adam Smith Business School
University Avenue
Glasgow, Scotland G12 8QQ
United Kingdom

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