Exploring the Relationship Between Environmental, Social, and Governance and Tax Avoidance Strategies

Bibliographic Data

ID16910185
AuthorsHyun-Ah Lee (0000-0001-5435-3192, Gachon University, corresponding author)
Year2024
Volume14
Issue4
Publication date2024-10-01
Open AccessYes
TypeARTICLE
VenueSAGE Open (JOURNAL)
Journal identifiersISSN: 2158-2440 • E-ISSN: 2158-2440
PublisherSAGE Publications (PUBLISHER • US)
DOI10.1177/21582440241298089
OpenAlexW4404416689
LanguageEN
References cited37

This study investigates how each environmental, social, and governance (ESG) dimension relates to tax avoidance in well- and poorly governed firms. The analysis uses data from 2016 to 2020 on A-share companies listed on the Shanghai and Shenzhen stock exchanges and three panel methodologies: pooled ordinary least squares, random effects, and fixed effects models. The results show that not all ESG dimensions are equally associated with tax avoidance, and the relationship between ESG and tax avoidance differs between well- and poorly governed firms. For well-governed firms, the social and governance dimensions positively correlate with tax avoidance, whereas the environmental dimension does not. For poorly governed firms, none of the three dimensions correlate with tax avoidance. These findings suggest that ESG and tax avoidance are more compatible than conflicting. Moreover, they underscore the importance of good corporate governance in enabling tax avoidance as an ESG-compatible strategy. This study addresses the debatable relationship between ESG and tax avoidance, which has significant implications for stakeholders, including managers, investors, and policymakers

Business · Corporate governance · Double taxation · Economics · Political science · Public economics · Tax avoidance · Corporate Taxation and Avoidance · Psychology · Social Psychology · Taxation and Compliance Studies · Taxation and Legal Issues

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Open DOIOpen Access