The Effects of Corporate Social Responsibility and Moderating Role of Size Firm on the Tax Avoidance Using Structural Equation Modeling

Document Type : Research Paper

Authors

1 Assistant Professor of Accounting, Islamic Azad University, Baft Branch, Baft, Iran.

2 Ph.D. Student of Accounting, Shiraz University, Shiraz, Iran.

Abstract

According to agency theory, social responsibility activities can be used to reduce political costs, reducing political costs can lead to a greater tendency to avoid tax evasion. However, political costs are highly dependent on the size of the company; because, according to the political cost hypothesis, larger companies are more under government control and thus more exposed to political costs; therefore, the main purpose of this study is to investigate the moderating effect of size firm on the relationship between social responsibility and tax avoidance. In this regard, the effective tax rate is used to measure tax avoidance and the KLD index is used to measure corporate social responsibility. For this purpose, a sample consisting of 1200 years-listed companies on the Tehran Stock Exchange during the years 2009-2020 has been studied using structural equations. The results showed that increasing social responsibility leads to reducing tax avoidance. Also, the results of research on the moderating effect of firm size showed that firm size has a moderating effect on the relationship between disclosure of social responsibility and tax avoidance. In other words, when the size of the company is larger, the relationship between social responsibility and tax avoidance is stronger.

Keywords


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