The Effect of ESG Performance on Tax Avoidance—Evidence from Korea

Bohyun Yoon, Jeong-Hwan Lee and Jin-Hyung Cho
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Bohyun Yoon: Division of Economics and Information Statistics, Kangwon National University; Kangwon 24341, Korea
Jeong-Hwan Lee: College of Economics and Finance, Hanyang University, Seoul 04763, Korea
Jin-Hyung Cho: College of Economics and Finance, Hanyang University, Seoul 04763, Korea

Sustainability, 2021, vol. 13, issue 12, 1-16

Abstract: We analyzed whether a firm’s engagement in socially responsible activities, as measured by environmental, social, and corporate governance (ESG) scores, influences their tendency to avoid tax in the Korean financial market. We found a negative relationship between Korean firms’ ESG scores and tax avoidance in terms of book-tax income difference during the sample period between 2011 and 2017. This result implies that firms with good CSR performance would tend not to manipulate taxable profits, which is in line with corporate culture theory. More interestingly, this trend has become more apparent for chaebol -affiliated firms, a special type of Korean conglomerate, than non- chaebol firms.

Keywords: ESG; BTD; CSR; corporate social responsibility; chaebol (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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