Roles of tax planning in market valuation of corporate social responsibility

Figures & data

Figure 1. Mediating role of tax planning on CSR–market value of equity relationship.

Figure 2. Moderating role of tax planning on CSR–market value of equity relationship.

Table 1. Sample selection

	Number of companies
Non-financial companies listed throughout 2008–2015	608
Extreme tax planning value	137
Changes of accounting year end	41
Incomplete annual reports	7
Inconsistency in reporting currency	1
Initial sample size	422

Table 2. Variable measurements

Variables	Measurements
Market value of equity (MVit+3)	Market value of equity 3 months after the year end
Book value of equity (BV)	Book value of equity at the year end
Profit before tax (PBT)	Profit before tax at the year end
Tax planning (TP)	Tax planning measured using BTD as in Equation (2)
CSR score (CSR)	CSR score measured using Equation (3)
Interaction of CSR and TP (CSRTP)	CSR × TP
Leverage (LEV)	Long-term debt/total assets
Capital intensity (CAPINT)	Gross machinery and equipment/total assets
Earnings management (EM)	PBT—net cash flow from operation
Foreign sales (FS)	Percentage of foreign sales over total sales
Dividends (DIV)	(Dividend per share/earnings per share) × 100
Growth of total assets (GTA)	((Current year total asset/Prior-year total asset) − 1) × 100
Industry (IND)	Industry category coded as “1” for each classification and “0” otherwise

Table 3. Descriptive statistics

n = 2,992	Mean	Min	Max	Standard deviation
MVt+3	1.8209	0.0089	25.8082	2.0557
BV	1.0535	0.0622	27.9860	0.5710
PBT	0.1920	−0.3098	4.8502	0.2447
TP	0.0215	−0.2786	1.3865	0.1418
CSR	18.0578	8.1356	38.6441	3.9159
LEV	0.0804	0.0000	0.9812	0.1079
CAPINT	0.2625	0.0000	2.4508	0.3012
EM	0.0051	−1.8445	2.9363	0.2616
FS	18.4162	0.0000	100.0000	26.5612
DIV	0.4527	0.0000	175.2917	4.1779
GTA	7.9029	−72.9500	3654.9800	70.4334

Table 4. Pearson correlation

	MV	BV	PBT	TP	CSR	CSRTP	LEV	CAPINT	EM	FS	DIV	GTA
MV	1.0000
BV	0.3119***	1.0000
PBT	0.7593***	0.4218***	1.0000
TP	0.3895***	0.2245***	0.5715***	1.0000
CSR	0.2794***	−0.0121	0.1460***	0.0423**	1.0000
CSRTP	0.3827***	0.1694***	0.5349***	0.9801***	0.0693***	1.0000
LEV	0.0620***	0.0070	0.0286	0.0156	0.1682***	0.0261	1.0000
CAPINT	0.0117	−0.0249	−0.0491***	0.0766***	0.1077***	0.0907***	−0.0941***	1.0000
EM	0.0570***	0.1892***	0.3051***	0.1897***	−0.0300	0.1681***	−0.0004	0.3172	1.0000
FS	0.0494***	−0.0098	0.0433**	0.1338***	0.1031***	0.1398***	−0.0862***	0.2743***	−0.0929***	1.0000
DIV	0.0185	−0.0024	0.0042	−0.0152	0.0265	−0.0150	−0.0237	0.0230	0.0036	0.0024	1.0000
GTA	0.2372***	0.2348***	0.1202***	0.1633***	0.0262	0.1920***	0.0656***	0.0223	−0.0630***	−0.0163	−0.0033	1.0000

*** and **  indicate significance levels at 1% and 5%, respectively.

Table 5. Multivariate results

DV = MVt+3	Model 1	Model 2	Model 3
BV	0.1513**	−0.0411	0.2226***
	(1.81)	(−0.50)	(2.71)
CSR	0.0969***	0.0788***	0.0923***
	(7.99)	(10.57)	(8.22)
PBT	5.4767***	6.7830***	5.5038***
	(12.44)	(32.00)	(12.70)
TP	−1.6121***	−1.2196***	−6.5571***
	(−3.79)	(−3.49)	(−4.90)
CSRTP			0.2642***
			(3.78)
LEV	−0.0016	−0.0300	−0.0515
	(0.00)	(−0.12)	(−0.16)
CAPINT	0.0340	−0.0044	0.0003
	(0.17)	(−0.04)	(0.00)
EM	−0.6997***	−1.1636***	−0.6987***
	(−5.17)	(−9.20)	(−5.04)
FS	0.0002	0.0000	0.0000
	(0.12)	(0.03)	(0.01)
DIV	0.0035**	0.0056*	0.0035**
	(2.29)	(1.76)	(2.32)
GTA	0.0045***	0.0042***	0.0040***
	(9.46)	(9.56)	(9.09)
Constant	−1.4651***	−0.0061	−1.4513***
	(−6.67)	(−0.53)	(−7.05)
R^2	73.34%	69.50%	73.36%
n	2,992	2,992	2,992
Wald χ^2	797.38***	2151.46***	954.67***
White	1119.60***	N/A	1182.44***
Breusch–Pagan	1886.39***	N/A	1950.55***

Cross–sectional clustered Eicker–Huber–White adjusted t-statistics are represented by the figures in the parentheses.

***, ** and * indicate significance levels at 1%, 5% and 10%, respectively.

CSR in Model 2a is significant at p < 0.05, β₁ = 0.0015 (t = 2.17).