Next Article in Journal
Optimum Insulation Thickness for Building Exterior Walls in 32 Regions of China to Save Energy and Reduce CO2 Emissions
Previous Article in Journal
The Effect of Geometry Parameters on Energy and Thermal Performance of School Buildings in Cold Climates of China
Article Menu
Issue 10 (October) cover image

Export Article

Open AccessArticle
Sustainability 2017, 9(10), 1710;

Study on Corporate Social Responsibility (CSR): Focus on Tax Avoidance and Financial Ratio Analysis

Department of Accounting and Taxation, Silla University, Busan 46958, Korea
Research Assistant of Institute of Global Business Research, Hankuk University of Foreign Studies, Seoul 02450, Korea
Author to whom correspondence should be addressed.
Received: 7 August 2017 / Revised: 14 September 2017 / Accepted: 20 September 2017 / Published: 24 September 2017
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
Full-Text   |   PDF [227 KB, uploaded 24 September 2017]


This study is an attempt to find a causal relation between financial ratios and tax avoidance. Aside from direct financial responsibilities, we conjecture that firms that avoid taxes will also face indirect negative financial repercussions, such as degradation of their reputation in the investment market. Corporate Social Responsibility (CSR: Corporate Social Responsibility) activities are reflected in the market as firms make a commitment to society, and investors perceive a positive value in an investment in such firms. Between the two contradictory drivers, tax avoidance and CSR activities, we seek to find their interplaying relation with financial ratios. From this study, tax authorities can regulate firms that engage in tax avoidance and encourage firms to conduct CSR activities. We summarize our findings as below: First, CSR activities deter tax avoidance, specifically in firms that are actively engaged in CSR. On the other hand, passive involvement in CSR does not have any influence on tax avoidance. Secondly, we find that current asset turnover, the labor-to-equipment ratio, the noncurrent liabilities ratio, and the net income-to-equity ratio all have a positive and significant influence on corporate tax avoidance. Conversely, common equity growth has been shown to be negatively related with corporate tax avoidance. From this empirical study, we contribute to the studies on tax avoidance by showing that there can be a voluntary method to reduce corporate tax avoidance in firms, which is by encouraging them to engage in CSR activities. View Full-Text
Keywords: Corporate Social Responsibility (CSR); Book-Tax Differences (BTD); Tax Avoidance (TS) Corporate Social Responsibility (CSR); Book-Tax Differences (BTD); Tax Avoidance (TS)
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

Share & Cite This Article

MDPI and ACS Style

Kim, J.; Im, C. Study on Corporate Social Responsibility (CSR): Focus on Tax Avoidance and Financial Ratio Analysis. Sustainability 2017, 9, 1710.

Show more citation formats Show less citations formats

Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Related Articles

Article Metrics

Article Access Statistics



[Return to top]
Sustainability EISSN 2071-1050 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
Back to Top