The Effect Of Corporate Social Responsibility On Tax Evasion

Corporate tax evasion has been a hot topic for a long time.Because of the acceleration of globalization,more Chinese companies tend to list abroad.Some of these companies are exploiting international tax policy to evade tax while attracting global investments.At the same time,the Corporate Social Responsibility Disclosure System has developed in China gradually.Some Chinese researchers has conducted research on the relevance of corporate social responsibility and tax evasion.However,few of them conducted the research using Chinese firms which listed abroad as sample.Hongkong,the first choice of Chinese firms'globalization,is one of the most famous tax heavens in the world.This dissertation examines the effect of corporate social responsibility on tax evasion activity using the Bloomberg ESG disclosure and other financial data of Chinese firms listing at Hongkong Stock Exchange,Shanghai Stock Exchange and Shenzhen Stock Exchange from 2015 to 2018.The research result indicates that there is a substitution effect between corporate social responsibility and tax evasion for both Hongkong listed Chinese firms and China Mainland firms.However,the substitution effect of Hongkong listed firms is stronger than the other one.This means in order to cover the cost of corporate social responsibility,the company with higher ESG score tends to do tax evasion to get lower tax cost.This dissertation improves the applicability of risk management view and provides suggestions for tax administration.Tax administration needs to improve the monitor system for Chinese firms listed in Hongkong and to set tax evaluation indicator using corporate social responsibility score.It is important to find the purpose for those firms to list abroad,in order to avoid tax erosion.At the same time,it is meaningful to improve the Corporate Social Responsibility Disclosure System.such as include tax related indicator,in order to achieve mutual restraint.