Aggressive tax planning and corporate social irresponsibility: Managerial discretion in the light of corporate governance

Ave-Geidi Jallai, Hans Gribnau

Research output: Working paperOther research output


The purpose of this contribution is to explore the possibility of integrating tax with corporate social responsibility (CSR). Some corporate directors seem to argue that they do not have a choice with regard to tax planning, implying that a responsible tax planning strategy is not an option. This contribution shows such argument to be wrong. First, the issue of management accountability and choice will be dealt with in the context of corporate governance systems in order to find out what kinds of obligations corporate governance entail for managers. It will be shown that corporate directors enjoy sufficient discretion for making socially responsible decisions. To this end, two existing theoretical frameworks will be analysed, according to which corporate decisions should prioritise either shareholders or stakeholders interests. Both theories allow managers a choice to act with a wider interest than purely shareholder value maximisation. Furthermore, it will be argued that managerial discretion to take CSR into account does not oblige managers to aspire to some kind of ideal social responsibility but rather to stay away from corporate social irresponsibility (CSI). Therefore, corporate managers in different corporate governance regimes have sufficient room for aligning their tax planning strategies with societal expectations and avoiding aggressive tax planning.

Thus, this paper aims to make two contributions to academic theory. First, it is shown that both shareholder and stakeholder-oriented corporate governance regimes allow for managerial discretion to take CSR on board in tax matters. Secondly, the concept of corporate social irresponsibility is introduced to enhance a more balanced debate about multinationals’ tax planning practices.
Original languageEnglish
Number of pages29
Publication statusPublished - 13 Mar 2018

Publication series

NameTilburg Law School Research Paper No. 05/2018


  • tax avoidance
  • aggressive tax planning
  • Corporate Governance
  • shareholder value
  • stakeholder orientation
  • managerial discretion
  • business judgement rule
  • Corporate social responsibility
  • corporate social irresponsibility
  • compliance beyond the law


Dive into the research topics of 'Aggressive tax planning and corporate social irresponsibility: Managerial discretion in the light of corporate governance'. Together they form a unique fingerprint.

Cite this