Abstract
Previous research has indicated that adopting Corporate Social Responsibility (CSR) activities may license unethical tax reporting behavior. By applying the Legitimacy Theory as a framework, this study examined the licensing effect from the consumer’s perspective, exploring whether consumers assume that a company known to invest in CSR activities would engage in aggressive tax avoidance practices. To this end, 331 college students rated their perceptions of major companies drawn from various sectors, regarding their CSR engagements and their tax avoidance practices. Findings demonstrated that consumers perceived companies to be more aggressive in tax avoidance practices when these companies were rated high in investment in extrinsic CSR (environmental protection and community relations). This effect was not found for intrinsic CSR (corporate governance, working environment and business ethics).
References
Ailawadi, Kusum L., Scott A. Neslin, Y. Jackie Luan, and Gail Ayala Taylor. 2014. Does Retailer CSR Enhance Behavioral Loyalty? A Case for Benefit Segmentation. International Journal of Research in Marketing 31: 156–167.
Bhattacharya, Chitra Bhanu, and Sankar Sen. 2004. Doing Better at Doing Good: When, Why, and How Consumers Respond to Corporate Social Initiatives. California Management Review 47: 9–24.
Brown, William O., Eric Helland, and Janet Kiholm Smith. 2006. Corporate Philanthropic Practices. Journal of Corporate Finance 12: 855–877.
Chen, Ester, Ilanit Gavious, and Rami Yosef. 2013. The Relationship Between the Management of Book Income and Taxable Income Under a Moderate Level of Book-Tax Conformity. Journal of Accounting, Auditing & Finance 28: 323–347.
Deegan, Craig, Michael Rankin, and John Tobin. 2002. An Examination of the Corporate Social and Environmental Disclosures of BHP from 1983–1997: A Test of Legitimacy Theory. Accounting, Auditing & Accountability Journal 15: 312–344.
Devinney, Timothy M. 2009. Is the Socially Responsible Corporation a Myth? The Good, the Bad, and the Ugly of Corporate Social Responsibility. The Academy of Management Perspectives 23: 44–56.
Du, Shuili, Chitrabhan B. Bhattacharya, and Sankar Sen. 2007. Reaping Relational Rewards from Corporate Social Responsibility: The Role of Competitive Positioning. International Journal of Research in Marketing 24: 224–241.
Ellen, Pam Scholder, Deborah J. Webb, and Lois A. Mohr. 2006. Building Corporate Associations: Consumer Attributions for Corporate Socially Responsible Programs. Journal of the Academy of Marketing Science 34: 147–157.
Forehand, Mark R., and Sonya Grier. 2003. When is Honesty the Best Policy? The Effect of Stated Company Intent on Consumer Skepticism. Journal of Consumer Psychology 13: 349–356.
Godfrey, Paul C., Craig B. Merrill, and Jared M. Hansen. 2009. The Relationship Between Corporate Social Responsibility and Shareholder Value: An Empirical Test of the Risk Management Hypothesis. Strategic Management Journal 30: 425–445.
Gravelle, Jane G. 2015. Tax Havens: International Tax Avoidance and Evasion. Washington, DC: Congressional Research Service.
Grigore, Georgiana, Mike Molesworth, and Rebecca Watkins. 2017. New Corporate Responsibilities in the Digital Economy. Corporate Social Responsibility in the Post-Financial Crisis Era, 41–62. Cham: Springer International Publishing.
Harari, Moran, Ofer Sitbon, and Ronit Donyets-Kedar. 2013. Aggressive Tax Planning and Corporate Social Responsibility in Israel. Accountancy Business and the Public Interest 12: 1–46.
Hoi, Chun Keung, Qiang Wu, and Hao Zhang. 2013. Is Corporate Social Responsibility (CSR) Associated with Tax Avoidance? Evidence from Irresponsible CSR Activities. The Accounting Review 88: 2025–2059.
Holder-Webb, Lori, Jeffrey Cohen, Leda Nath, and David Wood. 2009. The Supply of Corporate Social Responsibility Disclosures among US Firms. Journal of Business Ethics 84: 497–527.
Hooghiemstra, Reggy. 2000. Corporate Communication and Impression Management – New Perspectives Why Companies Engage in Corporate Social Reporting. Journal of Business Ethics 27: 55–68.
Khan, Uzma, and Ravi Dhar. 2006. Licensing Effect in Consumer Choice. Journal of Marketing Research 43: 259–266.
Kim, Yongtae, Myung Seok Park, and Benson Wier. 2012. Is Earnings Quality Associated with Corporate Social Responsibility? The Accounting Review 87: 761–796.
Labrecque, Lauren I., Jonas vor dem Esche, Charla Mathwick, Thomas P. Novak, and Charles F. Hofacker. 2013. Consumer Power: Evolution in the Digital Age. Journal of Interactive Marketing 27: 257–269.
Lanis, Roman, and Grant Richardson. 2012. Corporate Social Responsibility and Tax aggressiveness: A Test of Legitimacy Theory. Accounting, Auditing & Accountability Journal 26: 75–100.
———. 2015. Is Corporate Social Responsibility Performance Associated with Tax Avoidance? Journal of Business Ethics 127: 439–457.
Lev, Baruch. 2012. Winning Investors Over: Surprising Truths about Honesty, Earnings Guidance, and Other Ways to Boost Your Stock Price. Boston: Harvard Business Review Press.
Maignan, Isabelle. 2001. Consumers’ Perceptions of Corporate Social Responsibilities: A Cross-cultural Comparison. Journal of Business Ethics 30: 57–72.
Mason, Chris, and John Simmons. 2011. Forward Looking or Looking Unaffordable? Utilizing Academic Perspectives on Corporate Social Responsibility to Assess the Factors Influencing its Adoption by Business. Business Ethics: A European Review 20: 159–176.
Mazar, Nina, and Chen-Bo Zhong. 2010. Do Green Products Make us Better People? Psychological Science 21: 494–498.
Minor, Dylan, and John Morgan. 2011. CSR as Reputation Insurance: Primum Non Nocere. California Management Review 53: 40–59.
Monin, Benoit, and Dale T. Miller. 2001. Moral Credentials and the Expression of Prejudice. Journal of Personality and Social Psychology 81: 33–43.
Murphy, Richard. 2012. Closing the European Tax Gap. A Report for Group of the Progressive Alliance of Socialists & Democrats in the European Parliament. Tax Research LLP. http://docplayer.net/255731-Closing-the-european-tax-gap-a-report-for-group-of-the-progressive-alliance-of-socialists-democrats-in-the-european-parliament.html. Available on line October 2016.
O’Donovan, Gary. 2002. Environmental Disclosures in the Annual Report: Extending the Applicability and Predictive Power of Legitimacy Theory. Accounting, Auditing & Accountability Journal 15: 344–371.
O’Mara-Shimek, Michael, Manuel Guillén, Alexis J. Bañón, and Gomis. 2015. Approaching Virtuousness Through Organizational Ethical Quality: Toward a Moral Corporate Social Responsibility. Business Ethics: A European Review 24: S144–S155.
Öberseder, Magdalena, Bodo B. Schlegelmilch, and Verena Gruber. 2011. “Why Don’t Consumers Care about CSR?”: A Qualitative Study Exploring the Role of CSR in Consumption Decisions. Journal of Business Ethics 104: 449–460.
Pérez, Andrea, and Ignacio Rodríguez Del Bosque. 2013. Measuring CSR Image: Three Studies to Develop and to Validate a Reliable Measurement Tool. Journal of Business Ethics 118: 265–286.
Ritson, Mark. 2016. Should Marketers Really Aspire to Be Like Google and Apple?. Marketing Week. https://www.marketingweek.com/2016/02/03/mark-ritson-should-marketers-really-aspire-to-be-like-google-and-apple/. Available on line October 2016.
Sen, Sankar, and Chitra Bhanu Bhattacharya. 2001. Does Doing Good Always Lead to Doing Better? Consumer Reactions to Corporate Social Responsibility. Journal of Marketing Research 38: 225–243.
Sen, Sankar, Chitra Bhanu Bhattacharya, and Daniel Korschun. 2006. The Role of Corporate Social Responsibility in Strengthening Multiple Stakeholder Relationships: A Field Experiment. Journal of the Academy of Marketing science 34: 158–166.
Story, Joana, and Pedro Neves. 2015. When Corporate Social Responsibility (CSR) Increases Performance: Exploring the Role of Intrinsic and Extrinsic CSR Attribution. Business Ethics: A European Review 24: 111–124.
Williams, Geoffrey, and John Zinkin. 2008. The Effect of Culture on Consumers’ Willingness to Punish Irresponsible Corporate Behavior: Applying Hofstede’s Typology to the Punishment Aspect of Corporate Social Responsibility. Business Ethics: A European Review 17: 210–226.
Yin, George K. 2003. How Much Tax Do Large Public Corporations Pay?: Estimating the Effective Tax Rates of the S&P 500. Virginia Law Review 89: 1793–1856.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 The Author(s)
About this chapter
Cite this chapter
Toder-Alon, A., Te’eni-Harari, T., Giloz, E., Rosenstreich, E. (2018). License to Kill: Examining Licensing Effect in the Context of Corporate Social Responsibility and Tax Reporting from the Consumers’ Perspective. In: Grigore, G., Stancu, A., McQueen, D. (eds) Corporate Responsibility and Digital Communities. Palgrave Studies in Governance, Leadership and Responsibility. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-63480-7_12
Download citation
DOI: https://doi.org/10.1007/978-3-319-63480-7_12
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-319-63479-1
Online ISBN: 978-3-319-63480-7
eBook Packages: Business and ManagementBusiness and Management (R0)