TAX AVOIDANCE AND CORPORATE ENVIRONMENTAL RESPONSIBILITY: THE ROLE OF POLITICAL GOVERNANCE

This paper examines the relationship between tax avoidance and corporate environmental responsibility. Taking Chinese listed enterprises from 2008 to 2016 as a sample, we find there is a negative relation between tax avoidance and corporate environmental responsibility. However, it turns out that this negative relationship exists only in the sub-sample of state-owned enterprises (SOEs). In the sub-sample of non-state-owned enterprises (Non-SOEs), tax avoidance is positively related to corporate environmental responsibility. Furthermore, we find that political governance strengthens the negative relation between tax avoidance and corporate environmental responsibility. This result implies that political governance can motivate listed enterprises to pursue less tax avoidance and undertake more environmental responsibility.