Navigating Investment Efficiency: The Interplay of Tax Avoidance and Corporate Social Responsibility Disclosure: Evidence from Non-Financial Firms Listed on the Egyptian Stock Exchange

This research investigates the moderator role of Corporate Social Responsibility Disclosure (CSRD) in shaping the influence of Tax Avoidance on Investment Efficiency. This applied study was conducted on 16 non-financial Egyptian firms that were listed on the Egyptian Stock Exchange, EGX 100, from 2010 to 2020, with 160 annual observations. The study relied on secondary data published in the financial statements and reports of these companies, as well as the CSRD index. Furthermore, the Data Panel data method was implemented in the study, which combines cross-sectional and time series data. The study results showed a significant positive impact of tax avoidance on Investment Efficiency. Moreover, CSRD also has a significant positive impact on Investment Efficiency. While this study suggests that firms with higher levels of CSRD can play a mitigating role in the positive effect of tax avoidance. In other words, the interaction between CSRD and tax avoidance can moderate the independent positive effect of each on investment efficiency to a negative combined effect.

Upon conducting a literature review, it is evident that there is a lack of studies that have investigated the interactive relationship between the three variables—tax avoidance, investment efficiency, and corporate social responsibility disclosure—in a single analytical model. Therefore, this study provides a unique contribution by attempting to address this research gap, which may be beneficial to regulatory authorities and policymakers in the context of emerging markets.