Does ESG performance affect corporate tax avoidance? Evidence from China

Hongli Jiang, Wenjie Hu and Pengcheng Jiang

Finance Research Letters, 2024, vol. 61, issue C

Abstract: This study analyzes whether and how environmental, social, and governance (ESG) performance affects corporate tax avoidance by employing the data of China's A-share listed non-financial firms from 2009 to 2021. The results indicate that ESG performance significantly reduces corporate tax avoidance. The influence channels include alleviating financing constraints, improving the quality of internal control, and strengthening external supervision. Furthermore, the influence of ESG performance on tax avoidance is more pronounced in firms located in regions with underdeveloped FinTech, as well as in firms characterized by higher agency costs and lower audit quality. Overall, our findings indicate that ESG performance is crucial for curtailing tax avoidance behavior.

Keywords: ESG; Corporate tax avoidance; Financing constraints; Internal control quality; External supervision (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:61:y:2024:i:c:s1544612324000862

DOI: 10.1016/j.frl.2024.105056

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