Critical Analysis: Lanis & Richardson's CSR and Tax Avoidance Article

This report offers a critical analysis of the research article by Lanis and Richardson (2015) published in the Journal of Business Ethics, which investigates the association between Corporate Social Responsibility (CSR) performance and tax avoidance. The analysis examines the problem definition, research questions, hypotheses, research model (standard logit regression analysis), selection of quantitative methods, results, and conclusions. The report highlights the study's strengths, such as the clear problem statement and the use of appropriate quantitative methods, while also addressing limitations like the small sample size and the focus on publicly listed firms. The analysis discusses the findings, which indicate an inverse relationship between CSR performance and tax avoidance, and evaluates the article's contribution to the field, emphasizing its value for both researchers and policymakers seeking to understand and mitigate tax avoidance strategies. The report also critically assesses the sensitivity analysis and the logical flow of the research, providing an overall evaluation of the article's strengths and weaknesses.

Running Head: CRITICAL ANALYSIS OF AN ARTICLE 1
Critical Analysis of an Article
Name
Affiliation

CRITICAL ANALYSIS OF AN ARTICLE 2
Critical Analysis of an Article
The Article: Lanis, R & Richardson, G. (2015). Is Corporate Social Responsibility
Performance Associated with Tax Avoidance? Journal of Business Ethics. Vol. 127, No.2,
pp 439-457.
Introduction
For the past years, many research studies have been carried out on tax avoidance on
various organizations, including both private and public organizations. However, few researchers
have rarely taken time to investigate whether Corporate Social Responsibility (CSR)
performance has any impact on tax avoidance level. CSR is a very broad concept that takes on
numerous forms based on the industry and company. Thousands of businesses benefit their
societies through boosting their brands. Despite the fact that CSR is very valuable for both
companies and communities, some of them adhere to paying their taxes and others avoid them
(Lanis & Richardson, 2015). This paper provides a critical analysis of a research article
investigating whether CSR performance is associated with tax avoidance.
Problem definition
The problem statement is clearly and unequivocally stated in the abstract and
introduction of the article. The title of the article is catchy and attracts the reader`s interest since
it is self-explanatory and well described. For any curious reader, it can easily persuade him or her
to read more so as to have an extensive understanding of whether there is any association
between tax avoidance and CSR performance. The researchers focused on investigating whether
CSR performance of various firms is associated with tax avoidance. The problem is very
significant for tax collecting agencies and the government since it provides them with detailed

CRITICAL ANALYSIS OF AN ARTICLE 3
information and further confirmation of the relationship between tax avoidance and CSR
performance (Korschun et al, 2014). The problem statement is very convincing and persuades
the reader since the study provides broader view of understanding corporate taxes, their
avoidance, and the society as a whole. This is very important because it enables the taxation
agencies to discover more efficient strategies that can be used to decrease the levels of tax
avoidance among CSR performing firms. Theoratically, making of one element of CSR more
vital persuades a company to lower tax avoidance. The problem definition also constructs a
persuasive and cogent argument that create urge in the reader to continue reading the article
(Stehr & Jakob, 2014).
This article focused on a vital topic of tax avoidance. Today, there are thousands of firms
that employ all strategies so as to avoid taxes intentionally. Providing extensive knowledge and
evidence about the higher level of taxation avoidance associated with low level CSR performing
firms clearly indicates the firms, taxation agencies should focus on while carrying out the
taxation process. Some of the barriers taxation agencies face while trying to curb tax avoidance
is the absence of adequate information about the problem. Therefore, existence of such an online
publication specifically designed to investigate the firms associated with the problem of tax
avoidance helps law enforcement agencies particularly the ones responsible for taxation to obtain
extensive knowledge of the firms they should put more focus on (Schooley,2019).
Research questions
In the article, the authors do not clearly state the research question in the text body.
Instead, it is upon the reader to understand that the title of the article is the research question. The

CRITICAL ANALYSIS OF AN ARTICLE 4
use of quantitative data collection method of standard logit regression analysis fit the research
question since it facilitates assessment of all variables entailed in the study (Foley,2018).
Hypotheses developed
The hypothesis of the study is, the higher the CSR performance level, the fewer the
chances of a firm to avoid tax. The strategies to attain this hypothesis were in the conceptual
framework of the article. The inclusion of the conceptual framework helped the authors present
the extensive research they had carried out about the topic under investigation. Its inclusion also
helps the researchers to clearly identify and explain extensively the variables of the study
(Sheehy, 2015). More so, it can provide the scholars with foundation knowledge of developing
their own research design. Through a series of section reviews, the authors managed to develop
their hypothesis. Additionally, the inclusion of the conceptual framework helped the authors to
give a conceptual definition of the topic under investigation. This assists the reader to understand
taxation as a whole and the reason behind the practice of tax avoidance among various firms
(Lee & Kotler, 2013).
Research model
The authors carried out a quantitative research study and used a standard logit regression
analysis to test their hypothesis. Regression analysis is an effective quantitative research method
that is used to test relationship nature between dependent and independent variables. Since the
research question entails a dependent variable, independent variable and control variables, the
method used was an appropriate method that could help the researchers gain accurate results
(Ray,2015).

CRITICAL ANALYSIS OF AN ARTICLE 5
The use of standard logit regression analysis as a research design helped the researchers
obtain more accurate and reliable results. This type of research design is a bit more robust as
compared probit regression since it comprises of slightly fatter tails. It can also be used to attain
odds ratio in the presence of numerous variables. Through analyzing a group of all variable
together, logit regression is able to avoid confounding effects. With the use of this research
design, researchers do not need to normally distribute data. Instead, they just gather and analyze
it. Most importantly, this research design does not assume the existence of a linear relationship
between independent variables and dependent variables, and can manage any nonlinear effects
between the variables (Thabane et al, 2013). However, this type of research design needs
extensive data for the researchers to achieve meaningful and stable results. Additionally, the
article comprises of a conceptual framework that only provides researcher`s own perceptions
about the structure and the scope of the problem under investigation. It is very vital for the
researcher to extend his or her research basing on the ideas of other researchers and select the
best research method as well as research design basing on the one that provided the most
accurate results when used in the same research study like the one to be conducted (Farrington et
al, 2017).
Selection of quantitative methods
The researchers selected very appropriate quantitative methods for the study. The use of
logit regression analysis was very appropriate for such a problem with two variables. With the
help of the regression equation, the researchers can easily determine the values of the dependent
variable after obtaining the values of the independent variable and other variables such as the
control variables (Flom, 2018). The use of the base regression model also made it easy for the

CRITICAL ANALYSIS OF AN ARTICLE 6
researchers to examine the relationship between tax avoidance and CSR performance. Other
quantitative research methods such as interviews and questionnaires would have led to the
achievement of biased results (Flom, 2018).
Results and Conclusions
The results of the study are well published and organized. They clearly indicate that “the
higher the CSR performance level of a firm, the lower the likelihood of tax avoidance”.
Additionally, the researchers found out that there is less likelihood of tax avoidance among more
socially responsible firms as compared to less socially responsible firms. The authors presented
their results in various categories such as the regression results, correlation results. The authors
also organized the results in table form making it easy for the reader to read, understand, and
analyze the results of the study. However, the authors did not clearly explain the procedure of
data collection followed to obtain the results of their study. Instead, the authors only mentioned
the extraction of data from the Kinder, Lydenberg and Domini(KLD) data base between the
period of 2003 to 2009 (Kemper et al, 2013).
The article also comprises of a sensitivity analysis section in which the authors used
numerous tax avoidance proxy measures based on BTDs to analyze the findings of the study. In
quantitative research, carrying out a sensitivity analysis is one of the crucial things in research
that make the research article a reliable source of information. This tool plays a vital role in
making of assessments on how robust the findings of the study are. More so, sensitive analysis
helped the authors in exploring the errors associated with research model used in the study. In
this particular research study, sensitivity analysis was used as a technique by the researchers to
find out how the values of the independent variable will impact the dependent variable if certain

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assumptions were made. Significant findings were noted in the result section of the article.
However, the accuracy of the results was limited by several factors. Primarily, the sample size
was very small. A sample size of only 434 publicly listed firms in a time range of only 6 years is
very less as compared to the millions of companies bound to pay taxes in United States. A good
sample size should be about 10% of the total population. However, since there more that 5000
publicily listed firms in a span on 6 years, it makes the sample population too small for the study.
With such a sample size, it makes it challenging to generalize the results obtained to the large
number of firms both publicly listed and non-publicly listed firms. More so, all the firms that
were analyzed were publicly listed. This is also another limitation that makes it difficult to
generalize the results to the multiple number of firms around the world. Although the authors
mentioned the limitation of using only publicly listed firms, they did not discuss the most
important ones including the small sample size (Hosmer, 2013).
In the conclusion section of the article, the authors clearly restate the purpose of the study
carried out and the results obtained from all the methods and analysis of the study. As explained
by the author, the article as well as the study entailed in it has several benefits for both students
and other researchers who are interested in making further research about tax avoidance among
CSR performing firms. More so, the article provides generalizable evidence about the existence
of higher levels of tax avoidance among less socially responsible firms. It can act as a reliable
source of information for taxation agencies to develop strategies of decreasing the higher levels
of tax avoidance among lower level CSR performance firms. Besides explaining the benefits of
the study, the authors also clearly explained that there is a probability of the results of the study
being somehow inaccurate since the authors only used publicly listed firms in United States.

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More so, I believe that the use of the accuracy of the study results was affected with the use of
only publicly listed firms (Shields & Rangarajan, 2013).
The article was well written with all the procedures carried out flowing in a logical
manner. It was published with enough details making it easy for the reader to understand the
research question and make critical analysis of the findings obtained. The methods used to
analyze the findings of the study were very powerful and rich. Both Authors are very qualified
hence enhancing confidence of the reader in the study they carried out. Roman Lanis is an
Associate professor at the University of Technology Sydney majoring in the Accounting
Discipline while Grant Richardson is a former writer for seabl.com.au (Shields & Whetsell,
2017).
Conclusion
Generally, this is a good quantitative research article that used a standard logit regression
analysis research design to explore the level of tax avoidance in CSR performing firms. It
provides extensive knowledge of how CSR performance firms are associated with tax avoidance.
The authors concisely and clearly summarized the major features of the research study including
its objective, the sample size used in the study, the research design used and the results of the
study. This provides evidence for policy makers and taxation agencies to find the measures
through which the level of tax avoidance can be reduced among lower CSR performing firms.
Students and other professionals to carry out extensive research can use more so the article
provides relevant information that. However, the accuracy of the results was limited by the use
of only publicly listed firms.

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