1. SOCIAL RESPONSIBILITY, MACHIAVELLIANISM AND TAX AVOIDANCE: A STUDY OF HONG KONG TAX PROFESSIONALS by William E. SHAFER, Lingnan University, Hong Kong and Richard S. SIMMONS, Lingnan University, Hong Kong and Visiting Scholar, Department of Business Law and Taxation/ TLPRI Research Scholar, Monash University, Australia

2. Background
Increasing concern over the ethical behaviour of professional tax advisors
KPMG case
The slippery slope from tax avoidance to tax evasion
The effect of business education on (tax) ethics

3. Objective To investigate the effects of tax professionals’
a) perceptions of corporate ethics/social responsibility, and
b) Machiavellianism
on their ethical judgements and willingness to acquiesce in aggressive tax avoidance schemes

4. Corporate Ethics and Social Responsibility
Responsibility of corporations to society in general and to connected individuals in particular
Importance in recognising whether an ethical problem is even perceived in a given situation
Relevance to ethics in taxation
Measured by PRESOR scale (Singhapakdi et al., 1995)
“Stockholder” and “stakeholder” views

5. Machiavellianism Machiavelli’s “The Prince”
A cold, calculating and manipulative personality
Shown to have a significant impact on ethical decision making in several business contexts
Measured by MACH IV scale (Christie and Geis, 1970)

6. Research Hypotheses
1) Tax professionals who believe more strongly in the importance of corporate ethics and social responsibility will judge aggressive tax avoidance schemes more negatively (less ethical and socially responsible).
2) Tax professionals who judge aggressive tax avoidance schemes more negatively (less ethical and socially responsible) will estimate a lower likelihood of acquiescence in such schemes.
3) Tax professionals with stronger Machiavellian orientations will believe less strongly in the importance of corporate ethics/social responsibility.
4) Tax professionals with stronger Machiavellian orientations will judge aggressive tax avoidance schemes less negatively (more ethical and socially responsible).

7. Hypothesised relationships

8. Methodology
Survey of tax professionals in Hong Kong, the survey instrument consisting of
The PRESOR scale
The MACH IV scale
Demographic information
Scenarios to elicit ethical and social responsibility judgements and behavioural intentions

9. Scenarios

10. Responses: Means (standard deviations)

11. Empirical Model: Standardised Regression Coefficients (Significance) - Scenario A

12. Empirical Model:Standardised Regression Coefficients (Significance) - Scenario B

13. Conclusions Strong empirical support for each of the four hypotheses.
Tax professionals’ perceptions of the importance of corporate ethics and social responsibility had a significant impact on their ethical/social responsibility judgements wrt the tax scenarios, which in turn influenced their behavioural intentions.
Participants scoring higher on Machiavellianism were less likely to feel that corporate ethics and social responsibility are important, and more likely to judge aggressive corporate tax avoidance schemes favourably.