Corporate social responsibility and tax aggressiveness: a test of legitimacy theory

Roman Lanis*, Grant Richardson

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

162 Citations (Scopus)


Purpose: The purpose of this paper is to empirically test legitimacy theory by comparing the corporate social responsibility (CSR) disclosures of tax aggressive corporations with those of non-tax aggressive corporations in Australia. Design/methodology/approach: A unique sample of 20 Australian corporations accused by the Australian Taxation Office of engaging in tax aggressive activities during the 2001-2006 period was hand-collected. These 20 tax aggressive corporations were then matched with 20 non-tax aggressive corporations (based on industry classification, corporation size and time period). This process generated a choice-based sample of 40 corporations for empirical analysis. Using content analysis techniques, financial accounting data were gathered from the Aspect-Huntley database and CSR disclosures were individually measured for each corporation in the sample. Various statistical techniques were then used (e.g. paired sample statistics, Pearson correlation analysis and ordinary least squares regression analysis) to test legitimacy theory. Findings: Overall, the empirical results consistently show a positive and statistically significant association between corporate tax aggressiveness and CSR disclosure, thereby confirming legitimacy theory in the context of corporate tax aggressiveness. Originality/value: The paper provides empirical evidence in support of legitimacy theory as an explanation for why specific corporations disclose more CSR-related information than others. Additionally, to the best of the authors' knowledge, the paper is one of the first to document an empirical association between corporate tax aggressiveness and CSR in the literature.

Original languageEnglish
Pages (from-to)75-100
Number of pages26
JournalAccounting, Auditing and Accountability Journal
Issue number1
Publication statusPublished - 1 Jan 2013
Externally publishedYes


  • Australia
  • Corporate social responsibility
  • Disclosure
  • Legitimacy theory
  • Social responsibility
  • Tax aggressiveness
  • Taxes


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