Balancing Acts or Self‐Serving: The nexus Between Corporate Social Responsibility Decoupling and Tax Avoidance
Year: 2026
Type: article
Abstract: ABSTRACT Recent studies highlighted the phenomenon of corporate social responsibility (CSR) decoupling, where firms' CSR disclosures diverge from their actual CSR performance. This study investigates the relationship between CSR decoupling and tax avoidance, offering a dual‐theoretical lens that integrates legitimacy theory and agency theory. From a legitimacy perspective, we argue that firms experiencing reputational deficits due to CSR decoupling may engage in tax avoidance to signal financial success and restore stakeholder confidence. From an agency standpoint, CSR decoupling exacerbates information asymmetry and weakens governance, enabling opportunistic managers to pursue aggressive tax strategies that enhance short‐term financial metrics. By embedding these theoretical perspectives, our study contributes to the literature by conceptualizing CSR decoupling not merely as a disclosure‐performance gap, but as a strategic condition that influences financial behaviour. Empirical analysis supports our propositions, revealing a positive association between CSR decoupling and tax avoidance. Mechanism testing further validates our framework, identifying poor firm performance, elevated agency costs, and heightened information opacity as key channels linking CSR decoupling to tax avoidance. We also explore contextual contingencies—such as institutional environments, tax enforcement intensity, industry characteristics, and leadership traits—that moderate this relationship. Our findings offer important implications for investors, regulators, and policymakers concerned with corporate transparency, governance, and ethical conduct.
DOI: 10.1002/ijfe.70286
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7204568346