The Effect of Corporate Social Responsibility Performance on Tax Avoidance in Cambodia: The Moderating Role of Board Independence

Purpose: This study seeks to explore the connection between corporate social responsibility (CSR) performance and tax avoidance (TA) among a sample of Cambodian companies listed on the Cambodian Securities Exchange (CSX). It also investigates whether board independence moderates the relationship between these two variables. Methodology: Several statistical analyses have been conducted using the effective tax rate (ETR) and extracting accounting data from these companies' annual reports. Findings: The study reveals that Cambodian companies investing significant resources in charitable initiatives are less likely to participate in TA practices. It has also been realized that the influence of CSR in mitigating the likelihood of engaging in TA practices is boosted in firms with a higher proportion of independent directors. Implications: The study's findings have significant policy implications as they contribute to a better understanding of TA practices and CSR. This understanding can benefit numerous investors, regulators, and academics interested in firms' tax behavior. Furthermore, the findings can aid tax administrations in identifying conditions that heighten the risk of TA practices, thereby assisting in formulating effective tax systems that enhance firms' tax compliance. Originality: This study represents one of the initial inquiries into the relationship between CSR and TA practices in Cambodia. It provides a unique perspective by furnishing empirical evidence on this relationship within the Cambodian context, which differs from other cultural and institutional environments where previous studies have been conducted. It also offers new insights into how the independence of board directors moderates the relationship between CSR and TA. Limitations and directions for future research: This study primarily relies on firms' disclosed donation figures in financial statements. As such, the study may only partially represent the extent of CSR involvement and potentially impact the accuracy of CSR assessment.