CSR and Tax Aggressiveness of NSE NIFTY Companies

Evidence from Indian Emerging Economy

Abstract

This research paper intends to empirically investigate the association between Corporate Social Responsibility (CSR) disclosures and a corporation's tax aggressiveness. Additionally, it seeks to perform an empirical examination to inspect the applicability of legitimacy theory within the context of Indian companies. The data used in this empirical research work include companies included in the National Stock Exchange Nifty 50 collected from running multiple queries on the Prowess Database. Panel data analysis was performed in the study. A Hausman test was performed to identify the usage of a random effect model to assess the hypothesized relationship / equation. Broadly, the experimental results substantiate legitimacy theory in the light of corporate tax aggressiveness by repeatedly demonstrating a positive and statistically significant causal relationship between corporate tax aggressiveness and public disclosure of CSR. The outcome of the study contributes valuable comprehension into the interplay between CSR transparency and tax behaviours, shedding light on corporate tactics within the context of social accountability and regulatory compliance. The results reliably display a positive and statistically substantial relationship amongst tax aggressiveness and public disclosure of CSR, therefore sanctioning legitimacy theory in the framework of corporate tax aggressiveness. The present study offers a novel test of the theory of legitimacy and delivers a reasonable clarification why a few organizations release more information about corporate social responsibility than others. The limitation of the study includes usage of companies listed on the Nifty 50 index only along with use of a limited time period .This study proposes forthcoming studies to investigate a longer time frame to more accurately evaluate the emergence of corporate tax aggressiveness over the period of time. Legitimacy theory can also be examined in relation to the size of the company and CSR reflections.