Impact of Corporate Social Responsibility and Capital Allocation Efficiency on Family and Non -Family Firms

Utama

Martani

et al. 2021

SRJ

Self Cite

Purpose This paper aims to investigate the roles of corruption and tax allocation inefficiency in moderating the effect of tax aggressiveness on sustainable welfare. Design/methodology/approach This research uses a fixed-effect multiple regression analysis for 55,438 firm-year observations covering 22 countries from 2007 to 2017. Findings For less (more) tax-aggressive observations, corruption and tax allocation inefficiency strengthen the negative (positive) effect of tax aggressiveness on sustainable welfare. The results are in line with public choice and functionalism theories that suggest that private investments can increase welfare when governments are dysfunctional. Practical implications This paper shows that the effect of tax aggressiveness on sustainable welfare depends on tax aggressiveness, corruption and tax allocation inefficiency. Social implications This paper implies that governments should reduce their corruption levels and increase tax allocation efficiency because private investments are ineffective in the long run. Originality/value Because of increasing awareness of sustainability issue, sustainable welfare is considered more relevant than traditional welfare. Hence, empirical studies on the effect of tax aggressiveness on sustainable welfare are crucial. This paper adds the literature by combining public choice and functionalism theories to investigate the moderating roles of corruption and tax allocation inefficiency in this issue.

Section: Resultsmentioning

confidence: 80%

Section: Introductionmentioning

confidence: 99%

Tax aggressiveness and sustainable welfare: the roles of corruption and tax allocation inefficiency

Utama

Martani

et al. 2021

SRJ

Self Cite

“…Second, it has a large but not excessive environmental impact. Given that CSR activities vary across industries (Rudyanto, 2019), this research chose to focus on only one industry. Third, manufacturing firms were paragons in terms of state tax revenue.…”

Section: Methodsmentioning

confidence: 99%

Political connection as a double-edged sword: the case of tax aggressiveness practice during the COVID-19 pandemic

Julisar

Debora

2023

AJAR

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PurposeThis research aims to examine the association between political connection and tax aggressiveness during the COVID-19 pandemic and the role of business ethics in the association between political connection and tax aggressiveness.Design/methodology/approachThis study employs a multiple regression method for 147 manufacturing firms listed on the Indonesia Stock Exchange during the pandemic era.FindingsPolitical connection has no association with tax aggressiveness. However, political connection has a negative (positive) association with tax aggressiveness in more (less) ethical firms. The results are robust after controlling for year-fixed effects, endogeneity issues and other tax aggressiveness measurements.Originality/valuePolitical connection is often cited as the driver of unethical business, including tax aggressiveness. However, this paper claims and finds that political connection is a double-edged sword. Ethical firms use political connection to reduce their tax aggressiveness, and vice versa. Previous research has paid little attention to this topic. This paper also uses COVID-19 as a natural experiment to highlight the importance of corporate social responsibility activities as business ethics.

“…Family firms consist of family ownership and family management. Prior studies reveal that family-managed or family-owned firms have different attitudes towards CSR (Block and Wagner, 2014b; Cabeza-García, Sacristán-Navarro and Gómez-Ansón, 2017) and slack resources (Rudyanto, 2019; Yun Shi et al ., 2008) than non-family-managed and family-owned firms. According to socioemotional wealth theory, family-managed or family-owned firms arguably have more CSR activities than non-family-managed or family-owned firms because they have closer stakeholder relationships (Hauswald and Hack, 2013; Cabeza-García, Sacristán-Navarro and Gómez-Ansón, 2017).…”

Section: Introductionmentioning

confidence: 99%

Socioemotional wealth of family firms during the COVID-19 pandemic: the role of slack resources

2023

JFBM

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PurposeThis study investigates the behaviour of family firms, family management and family ownership regarding their socioemotional wealth (Corporate Social Responsibility (CSR)) during the COVID-19 pandemic and according to their slack resources availability.Design/methodology/approachThis study employs a multiple regression analysis to analyse 245 firm-year observations from 2020 to 2021.FindingsFamily firms have a negative effect on CSR, as do family management and family ownership. Slack resources (both absorbed and unabsorbed) reduce the negative effect of family firms (and family ownership) on CSR. Unabsorbed slack resources reduce the negative effect of family management on CSR and absorbed slack resources increase the negative effect of family management on CSR. The results are robust with various measurements of slack resources. Extra analyses reveal that family commissioner has no effect on CSR.Originality/valueTo the best of the author’s knowledge, this is the first empirical study to analyse the impact of COVID-19 on the preservation of socioemotional wealth in family firms. This study proves the theoretical argument of prior studies that the preservation of socioemotional wealth in family firms during the COVID-19 pandemic depends on their financial condition. The study also proves that there are different attitudes among family ownership, family management and family firms concerning the use of slack resources for socioemotional wealth preservation that have not been analysed by previous research.