Corporate Social Responsibility (CSR) and Tax Avoidance: A Literature Review on Contextual Factors

As empirical research on the relationship between corporate social responsibility (CSR) and tax avoidance has stressed heterogeneous results, this literature review focuses on contextual factors of this dynamic link. Seventy-three peer-reviewed archival studies on that topic are identified, leading to either a positive or a negative impact of CSR on tax avoidance and vice versa. This paper recognizes the controversial views of the principal-agent and stakeholder theories. Firm- and country-related moderator variables are recognized as contextual factors. Moreover, country-specific studies are further separated into developed and developing countries, code law and case law regimes, levels of shareholder protection and legal enforcement. We find that archival studies often analyze the impact of CSR performance on tax avoidance in Anglo-American countries (case law and developed regimes), while other directions are rarely included. In line with our inconclusive theoretical framework, we cannot find clear indications of a positive or negative relationship between CSR and tax avoidance. Moreover, we cannot identify major differences between developed and developing regimes, case and code law regimes, and levels of shareholder protection and legal enforcement. However, some tendencies can be identified that effective corporate and country governance strengthens (weakens) the negative (positive) impact of CSR on tax avoidance. We guide researchers in stressing major limitations of prior studies and articulate recommendations for future research designs.