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The effect of corporate social responsibility on earnings management and tax avoidance in Chinese listed companies

Author

Listed:
  • Haijing Liu
  • Hyun-Ah Lee

Abstract

Purpose - This paper aims to verify the effect of corporate social responsibility (CSR) on Chinese listed firms’ earnings management and tax avoidance. Specifically, this study investigates whether government-guided CSR implementation indeed drives firms to behave in a responsible manner by constraining earnings management and tax avoidance. Design/methodology/approach - The paper analyses a sample of Chinese listed companies that are confronted with the unique situation of CSR being developed at a rapid pace by government-led policy and regulation. The study further investigates whether the effect of CSR on earnings management and tax avoidance is different for state-owned and private enterprises by partitioning the sample into these two subgroups. Findings - The findings of this study show that government-guided CSR could be effective in reducing the firms’ earnings management and tax avoidance, even though the effect is limited to state-owned enterprises. Originality/value - This paper provides new evidence on the relation of CSR with earnings management and tax avoidance in the Chinese context and sheds light on the importance of differentiating between the state-owned and private enterprises when studying the corporate behaviors of Chinese firms.

Suggested Citation

  • Haijing Liu & Hyun-Ah Lee, 2019. "The effect of corporate social responsibility on earnings management and tax avoidance in Chinese listed companies," International Journal of Accounting & Information Management, Emerald Group Publishing Limited, vol. 27(4), pages 632-652, October.
    • Handle: RePEc:eme:ijaimp:ijaim-08-2018-0095
    DOI: 10.1108/IJAIM-08-2018-0095
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    Citations

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    Cited by:

    1. Olfa Ben Salah, 2024. "Analyzing the Causal Relationship Between Tax Avoidance and Earnings Management: Evidence from The STOXX Europe 600 Index," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 23(1), pages 29-49, January.
    2. Karima Lajnef & Kawther Dhifi, 2024. "Integrating Reporting Bridge, the Gap Between CSR Performance and Tax Avoidance Relationship? Insights from South Africa," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 41-59.
    3. Ahmad Yuosef Alodat & Hamzeh Al Amosh & Osamah Alorayni & Saleh F. A. Khatib, 2024. "Does corporate sustainability disclosure mitigate earnings management: empirical evidence from Jordan," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(1), pages 165-174, March.

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