Does CSR affect tax avoidance? Moderating role of political connections in Bangladesh banking sector
ISSN: 1747-1117
Article publication date: 25 September 2023
Issue publication date: 20 February 2024
Abstract
Purpose
This study aims to investigate whether socially responsible businesses with corporate social expenditure are less prone to engaging in tax avoidance. The study also examines whether political connections moderate the association between corporate social responsibility (CSR) and tax avoidance.
Design/methodology/approach
The study uses ordinary least squares to analyse the panel data of all 30 listed banks on the Dhaka Stock Exchange covering 2012 to 2020. The study uses a set of alternative variables to check the robustness of the findings.
Findings
Confirming the corporate culture theory, the study findings indicate that the higher the firms’ CSR expenditure, the lower the tax avoidance. Contrarily, the moderating effect of political connection weakens the role of CSR in tax avoidance, implying that political relation makes the firms socially irresponsible. Besides, the findings document that firms with strong political connections are more likely to be tax aggressive by weakening the role of CSR. The findings imply that firms with weaker political connections are more socially responsible than firms with strong political ties.
Research limitations/implications
The study provides the bank management and regulatory bodies valuable insights to take necessary actions so that they can easily monitor whether the banks follow their instructions regarding CSR and tax payments. As the politicians make the firm socially irresponsible, the regulatory bodies and bank management should not keep them or their relatives on the board.
Originality/value
The study contributes to the CSR and tax avoidance literature considering the moderating role of political connections in Bangladesh banking sector.
Keywords
Acknowledgements
The paper presented in the 5th International Conference on Governance and Strategic Management (ICGSM) organized by Accounting Research Institute of Universiti Teknology Mara, Malaysia in collaboration with Center for Governance Resilience and Accountability Studies, Faculty of Economics and Management, Universiti Kebangsaan Malaysia and Persatuan Badan Berkanun Malaysia held in Said Business School, University of Oxford on 23-24 August, 2022. Therefore, the authors thank the anonymous reviewers, participants and discussants of the conference for providing valuable suggestions for further improvement.
Citation
Rashid, M.H.U., Begum, F., Hossain, S.Z. and Said, J. (2024), "Does CSR affect tax avoidance? Moderating role of political connections in Bangladesh banking sector", Social Responsibility Journal, Vol. 20 No. 4, pp. 719-739. https://doi.org/10.1108/SRJ-09-2022-0364
Publisher
:Emerald Publishing Limited
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