We examine the association between mandatory corporate social responsibility (CSR) disclosure and economic contribution (tax payments) in China, where we expect this association to be affected by a region's institutional attributes. Exploiting a dataset that shows cross-regional variations in institutions, we find that in regions with lower institutional quality, firms claiming to be socially responsible actually avoid taxes, whereas CSR disclosure in other regions is more aligned with the social responsibility aspect of tax compliance. Our study contributes to the literature by demonstrating that in the absence of proper institutions, CSR disclosure is likely to remain a form of window dressing.
Bibliographical noteThis paper won the 36th International Business Research Conference Best Paper Award. Kenny Lin acknowledges financial support from Lingnan University (Funding Ref. DR13A1).
- Business ethics and social responsibility
- Tax avoidance
- Transition economies