Mi. 08.05.2019

Social responsibility of firms

The social responsibilities of for-profit corporations have gained importance recently, and Corporate Social Responsibility (CSR) has become both a goal and a set of guidelines for various corporate activities. CSR encompasses a number of dimensions, including environmental impacts, treatment of employees, and relations to local communities. In his lecture, Bruce Carruthers considers the relationship between CSR and corporate taxes: Do firms that are “good citizens” also pay higher taxes? Is it the social responsibility of firms to help pay for public services? Focusing on the percentile rank of effective tax rates, and using random effects panel regression of a data set of publicly-traded US firms that includes measures of CSR and many financial variables, he shows that the relationship between CSR and taxation is a complicated one that warrants further investigation. Strong corporate governance, a typical component of CSR, is associated with lower tax rates, suggesting that responsibility to shareholders conflicts with broader social responsibilities.

Bruce Carruthers is the John D. MacArthur Professor of Sociology at Northwestern University, formerly the director of the Buffett Institute for Global Studies, and currently a Visiting Fellow at the Swedish Collegium for Advanced Study.