Investigating the Moderating Role of Audit Quality on the Effect of Corporate Social Responsibility on Tax Aggressiveness Using Static and Dynamic Approaches

Shamgani, Reza; Azhdar, Mohsen; Tirbakhsh Gouran, Souror

[Home ] [Archive]

[ فارسی ]

Main Menu

Home

Journal Information

Articles archive

For Authors

For Reviewers

Registration

Contact us

Site Facilities

Search in website

Receive site information

year 17, Issue 68 (2026)

fa 2026, 17(68): 83-106

Back to browse issues page

Investigating the Moderating Role of Audit Quality on the Effect of Corporate Social Responsibility on Tax Aggressiveness Using Static and Dynamic Approaches

Reza Shamgani¹

, Mohsen Azhdar ^*¹

, Souror Tirbakhsh Gouran¹

1- Department of Accounting, Shk.C., Islamic Azad University, Shahrekord, Iran.

Abstract: (188 Views)

The aim of this study is to investigate the effect of corporate social responsibility (CSR) on tax aggressiveness and the moderating role of audit quality in this relationship, within the framework of companies' implicit tax contracts with the government, among firms listed on the Tehran Stock Exchange. To test the research hypotheses, financial data of 113 companies listed on the Tehran Stock Exchange were selected using a systematic sampling method for a ten-year period from 2015 to 2024, and were statistically analyzed using panel data regression in both static and dynamic approaches, employing Stata software version 17. Furthermore, to measure audit quality, two components were utilized: financial statement restatement and audit fees. The findings indicate that corporate social responsibility has a significant negative effect on tax aggressiveness. Moreover, the significant negative coefficient of the interaction effect (CSR × audit quality) in both dimensions suggests that audit quality intensifies the negative relationship between CSR and tax aggressiveness. In other words, in firms with higher audit quality (higher audit fees and no restatement), the negative effect of CSR on tax aggressiveness becomes stronger. These findings demonstrate that audit quality, as a formal monitoring mechanism, along with corporate social responsibility as a voluntary governance mechanism, operate synergistically and provide the groundwork for reducing opportunistic tax behaviors. The present study is innovative in three respects: First, unlike previous studies in Iran that have predominantly examined the direct relationship between corporate social responsibility and tax aggressiveness, this study considers audit quality as a moderating variable and investigates the interaction between two voluntary and formal monitoring mechanisms. Second, by simultaneously employing both static and dynamic approaches and controlling for the effect of tax inertia, it takes into account, for the first time in the domestic literature, the dynamic and memory-based nature of corporate tax behavior. Third, by empirically testing two complementary and substitution scenarios in Iran's institutional context and providing evidence of a complementary mechanism, it enriches the literature on implicit contract and economic deterrence theories in environments with concentrated ownership structures.

Article number: 5

Keywords: Corporate Social Responsibility, Tax Aggressiveness, Audit Quality, Static and Dynamic Approaches.

Full-Text [PDF 615 kb] (93 Downloads)

Type of Study: Research | Subject: Special

References

1. Abdul Wahab, E.A., A.M. Ariff, M. Madah Marzuki & Z. Mohd Sanusi. (2017). Political connections, corporate governance, and tax aggressiveness in Malaysia. Asian Review of Accounting 25(3): 424-451.

2. Adegbite, T., & B. Azeez. (2022). Company income tax revenue and economic growth: empirical evidence from Sub-Sahara countries in Africa. Journal of Economic Research & Business Administration 139(1): 39-49.

3. Adegbite, T.A. (2020). The effects of IFRS adoption on taxation in Nigerian manufacturing companies. Financial Sciences. Nauki o Finansach 25(4): 1-15.

4. Adegbite, T.A., & M. Bojuwon. (2019). Corporate tax avoidance practices: an empirical evidence from nigerian firms. Studia Universitatis Babes-Bolyai 64(3): 39-53.

5. Akhter, W., & A. Hassan. (2024). Does corporate social responsibility mediate the relationship between corporate governance and firm performance? Empirical evidence from BRICS countries. Corporate Social Responsibility and Environmental Management 31(1): 566-578.

6. Arellano, M., & S. Bond. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies 58(2): 277-297.

7. Austin, C.R., D.D. Bobek & E.G. LaMothe. (2020). The effect of temporary changes and expectations on individuals' decisions: Evidence from a tax compliance setting. The Accounting Review 95(3): 33-58.

8. Becker, G.S. (1968). Crime and punishment: An economic approach. Journal of Political Economy 76(2).

9. Blundell, R., & S. Bond. (1998). Initial conditions and moment restrictions in dynamic panel data models. Journal of Econometrics 87(1): 115-143.

10. Carroll, A.B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons 34(4): 39-48.

11. Carroll, A.B. (2016). Carroll's pyramid of CSR: taking another look. International Journal of Corporate Social Responsibility 1(1): 3.

12. Carroll, A.B., & K.M. Shabana. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. International Journal of Management Reviews 12(1): 85-105.

13. Chijoke-Mgbame, C.O., M.A. Chijoke-Mgbame, S. Yekini & C.O. Yekini. (2017). Corporate social responsibility performance and tax aggressiveness. Journal of Accounting and Taxation 9(8): 101-108.

14. Davis, A.K., D.A. Guenther, L.K. Krull & B.M. Williams. (2016). Do socially responsible firms pay more taxes? The Accounting Review 91(1): 47-68.

15. DeAngelo, L.E. (1981). Auditor size and audit quality. Journal of Accounting and Economics 3(3): 183-199.

16. Delgado, F.J., E. Fernández-Rodríguez, R. García-Fernández, M. Landajo & A. Martínez-Arias. (2023). Tax avoidance and earnings management: a neural network approach for the largest European economies. Financial Innovation 9(1): 19.

17. Desai, M.A. & D. Dharmapala. (2006). Corporate tax avoidance and high-powered incentives. Journal of Financial Economics 79(1): 145-179.

18. Dyreng, S.D., M. Hanlon & E.L. Maydew. (2010). The effects of executives on corporate tax avoidance. The Accounting Review 85(4): 1163-1189.

19. El Ghoul, S., O. Guedhami, J.A. Pittman & S. Rizeanu. (2016). Cross‐country evidence on the importance of auditor choice to corporate debt maturity. Contemporary Accounting Research 33(2): 718-751.

20. Fosu, E., K. Yi & D. Asiedu. (2024). The effect of CSR on corporate social performance: Mediating role of corporate image, green innovation and moderating role of corporate identity. Corporate Social Responsibility and Environmental Management 31(1): 69-88.

21. Francis, B.B., R.E. García & J.G. Harithsa. (2025). Taxes under stress: bank stress tests and corporate tax planning. China Accounting and Finance Review 27(1): 1-39.

22. Francis, J., P.N. Michas & S.E. Seavey. (2014). Does audit market concentration harm the quality of audited earnings? Evidence from audit markets in 42 countries. Contemporary Accounting Research 31(1): 325-355.

23. Frank, M.M., L.J. Lynch & S.O. Rego. (2009). Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review 84(2): 467-496.

24. Gaaya, S., N. Lakhal & F. Lakhal. (2017). Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality. Managerial Auditing Journal 32(7): 731-744

26. Hoi, C.K., Q. Wu & H. Zhang. (2013). Is corporate social responsibility (CSR) associated with tax avoidance? Evidence from irresponsible CSR activities. The Accounting Review 88(6): 2025-2059.

27. Hou, T.C.T. (2019). The relationship between corporate social responsibility and sustainable financial performance: Firm‐level evidence from Taiwan. Corporate Social Responsibility and Environmental Management 26(1): 19-28.

28. Ioannou, I., & G. Serafeim. (2012). What drives corporate social performance? The role of nation-level institutions. Journal of International Business Studies 43(9): 834-864.

29. Jensen, M.C. & W.H. Meckling. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. In Corporate Governance, pp. 77-132. Gower.

30. Jihene, F., & D. Moez. (2019). The moderating effect of audit quality on CEO compensation and tax avoidance: Evidence from Tunisian context. International Journal of Economics and Financial Issues 9(1): 131.

31. Klassen, K.J., P. Lisowsky & D. Mescall. (2016). The role of auditors, non-auditors, and internal tax departments in corporate tax aggressiveness. The Accounting Review 91(1): 179-205.

32. Knechel, W.R. (2021). The future of assurance in capital markets: Reclaiming the economic imperative of the auditing profession. Accounting Horizons 35(1): 133-151.

33. Laguir, I., R. Staglianò & J. Elbaz. (2015). Does corporate social responsibility affect corporate tax aggressiveness? Journal of Cleaner Production 107: 662-675.

34. Landis, J.R. & G.G. Koch. (1977). The measurement of observer agreement for categorical data. Biometrics 159-174.

35. Lanis, R., & G. Richardson. (2013). Corporate social responsibility and tax aggressiveness: a test of legitimacy theory. Accounting, Auditing & Accountability Journal 26(1): 75-100.

36. Lanis, R., & G. Richardson. (2018). Outside directors, corporate social responsibility performance, and corporate tax aggressiveness: An empirical analysis. Journal of Accounting, Auditing & Finance 33(2): 228-251.

38. Lawshe, C.H. (1975). A quantitative approach to content validity. Personnel Psychology 28(4): 563.

39. Leonidou, L.C., P.P. Eteokleous, P. Christodoulides & J.S. Eduardsen. (2023). A dynamic capabilities perspective to socially responsible family business: Implications on social-based advantage and market performance. Journal of Business Research 155: 113390.

40. Mao, C.W. (2019). Effect of corporate social responsibility on corporate tax avoidance: evidence from a matching approach. Quality & Quantity 53(1): 49-67.

41. Marques, M., T.M. Montenegro & F.A. Brás. (2024). Tax avoidance and corporate social responsibility: A meta-analysis. Journal of the American Taxation Association 46(1): 137-156.

42. Nyamekye, O., E.E. Sabah Welbeck & M.A. Cudjoe. (2025). Examining the effect of corporate social responsibility and audit quality on corporate tax aggressiveness. Journal of Accounting in Emerging Economies 15(3): 739-760.

43. Ofori, D.F. (2021). Corporate social responsibility (CSR) in Ghana: issues and perspectives. Business and Society Review 126(2): 217-239.

44. Shin, Y., & B. Choi. (2024). Changes in Tax Strategies Due to Corporate Sustainability: Focusing on the Disclosure of Investment Alert Issues. Sustainability 16(18): 8064.

45. Suchman, M.C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review 20(3): 571-610.

46. Wallace, W.A. (2018). The economic role of the audit in free and regulated markets: A look back and a look forward. Research in Accounting Regulation 17: 267-298.

47. Watkins, A.L., W. Hillison & S.E. Morecroft. (2004). Audit quality: A synthesis of theory and empirical evidence. Journal of Accounting Literature 23: 153.

Send email to the article author

Add your comments about this article

Mendeley

Zotero

RefWorks

Shamgani R, Azhdar M, Tirbakhsh Gouran S. Investigating the Moderating Role of Audit Quality on the Effect of Corporate Social Responsibility on Tax Aggressiveness Using Static and Dynamic Approaches. fa 2026; 17 (68) : 5
URL: http://qfaj.mobarakeh.iau.ir/article-1-2947-en.html

Rights and permissions
	This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

year 17, Issue 68 (2026)

Back to browse issues page

Persian site map - English site map - Created in 0.17 seconds with 37 queries by YEKTAWEB 4732