New Study Reveals: Companies Use Tax Information to Polish Their Environmental Image
New Study Reveals: Companies Use Tax Information to Polish Their Environmental Image
A comprehensive new study published in the Journal of Accounting and Taxation reveals intriguing connections between tax avoidance, environmental performance, and corporate reporting.
The article titled "The Impact of Tax Avoidance and Environmental, Social, and Governance Performance on the Cost of Equity Capital: Evidence from China" — co-authored by Johannes Schneider, Associate Professor of Data Science & Artificial Intelligence at the University of Liechtenstein — explores how companies use tax information in their corporate social responsibility (CSR) reports.
Key Findings of the Study:
- CSR and Taxes: The study analyzed 2,984 CSR reports from 22 countries and found that companies tend to disclose only limited tax information. Instead of presenting comprehensive strategies, they often frame tax payments as a social good. Of the 107 reports from companies based in Switzerland, 67.3% included tax information, and 34.6% highlighted the benefits of tax payments for the public and society.
- Symbolic Disclosure: There is a negative correlation between strong environmental performance and tax-related CSR disclosures. Companies with weaker environmental records often use tax topics to enhance their public image.
- Tax Avoidance: Firms engaging in tax avoidance tend to portray their tax payments in a positive light — particularly in the U.S. — using this information to preserve or restore their reputation.
- Disclosure Motivation: Companies use tax-related CSR disclosures to emphasize good performance and improve their public image.
Relevance and Implications:
At a time of increasing demands for transparency and environmental responsibility, this study offers valuable insights into corporate reporting practices. It shows that tax information is often used strategically by companies to boost their image without necessarily providing substantial additional information or taking meaningful action. These findings are of interest to both standard setters and readers of CSR reports.
The original article is published in the Journal of the American Taxation Association: https://www.uni.li/de/forschung/forschungsaktivitaeten/veroeffentlichungen/publikationen/@@publication_detail/9604.67