Unveiling the relationships among tax avoidance and sustainable firms' performance: Empirical evidence from Pakistan manufacturing firms

Abstract

Our paper examines the complex links between tax avoidance, CSR, and SFP in Pakistan's manufacturing industry. Tax avoidance, a strategy often employed to enhance shareholder wealth, presents a paradox by potentially undermining reputational integrity and increasing organizational costs. Conversely, CSR initiatives aim to bolster social and environmental accountability, influencing financial and non-financial performance outcomes. Drawing on agency theory frameworks, this research explores CSR moderates the association between tax avoidance and SFP, and addresses the critical gap in the existing literature. Employing a quantitative methodology, this study analyzes data from Pakistani manufacturing firms, offering empirical insights into the dual role of tax avoidance as both a driver and inhibitor of sustainable practices. The findings highlight the nuanced dynamics between profit maximization and ethical corporate conduct, emphasizing the moderating effect of CSR in fostering sustainable outcomes. This study contributes to a deeper organizational behavior know-how and sustainability in emerging economies, also offering implications for policymakers, corporate leaders, and stakeholders in balancing financial performance with social responsibility.