Corporate Social Responsibility of U.S.-Listed Firms Headquartered in Tax Havens

• In Event: Research with an Impact on Scholarship: Auditing and Social Responsibility

Abstract

Using 138 firm-year observations for 46 U.S.-listed firms headquartered in tax havens from 2004 to 2013, this study documents that the level of corporate social responsibility (CSR) engagement is relatively lower for firms with tax haven headquarters (HQ) than for firms with U.S. HQ. This result is robust to the use of firms’ philanthropic spending as an alternative proxy for CSR. A poor relationship with stakeholders in society at large is the main source of the negative correlation between CSR and the presence of HQ in offshore tax havens. Overall, the findings are consistent with the notion that when corporations contribute little to society in the form of taxes, they also largely forgo the opportunity to make social contributions to local communities, despite the greater availability of economic resources from offshore tax savings.

Author

• Dongyoung Lee, McGill University