How Does Corporate Social Responsibility Affect Financial Performance and Tax Avoidance in ASEAN Companies?

Abstract

Manuscript type: Research paper
Research aims: This study aims to shed light on the relationship between
Corporate Social Responsibility (CSR), financial performance, and tax
avoidance among ASEAN-listed companies, while taking into account the
role of the Board of Directors (BoD) as a moderating variable.
Design/Methodology/Approach: This study adopts a quantitative
approach and utilises panel data from 181 publicly listed companies
across six ASEAN countries, Indonesia, Thailand, Singapore, Malaysia,
Philippines, and Vietnam, covering a ten-year period (2013–2022).
Multiple linear regression was employed to examine the direct effect of
CSR on financial performance (measured by ROA, ROE, NPM) and tax
avoidance (measured by ETR and NETR), as well as the moderating role
of the BoD. Robustness tests were performed using alternative model
specifications and sub-sample analyses.
Research findings: The findings indicate that CSR exerts a positive
relationship with financial performance. By contrast, this study fails to
prove the ability of CSR to reduce tax avoidance. The moderating role of the BoD exhibits mixed results, demonstrating greater consistency
in curbing tax avoidance than in enhancing financial performance.
Robustness checks further validate the stability of the main findings.
Theoretical Contribution/Originality: This study extends CSR and
corporate governance literature by offering cross-country evidence from
ASEAN countries, highlighting the varying effectiveness of CSR and the
BoD in influencing both financial performance and tax avoidance.
Practitioner/Policy implications: Integrating CSR into corporate strategy,
when reinforced by competent and responsive boards, has the potential
to improve financial performance and reduce tax avoidance, particularly
when adapted to country-specific regulatory and cultural contexts.
Research Limitations: Among the limitations are those regarding access
to the data and language barriers, particularly in Vietnam and Thailand,
where annual and sustainability reports are primarily in local languages.