When boards go green: eco-innovation and corporate tax avoidance

Selma Abdelwahed, Habiba Ladhari and Mhamed Ben Slimane

Accounting Research Journal, 2026, vol. 39, issue 6, 909-932

Abstract: PurposeThis paper investigates the relationship between eco-innovation and corporate tax avoidance and examines the moderating role of board efficiency. It aims to determine whether firms that invest in environmentally sustainable innovation adopt more responsible fiscal strategies.Design/methodology/approachUsing 63,710 firm-year observations from 48 countries covering the period 2002–2021, the study uses a range of panel econometric techniques to ensure robustness and address potential endogeneity concerns.FindingsThe results reveal that eco-innovation is negatively and significantly associated with corporate tax avoidance, indicating that firms actively engaging in eco-innovation adopt less aggressive fiscal strategies. Moreover, the results show that board efficiency strengthens the negative association between tax avoidance and eco-innovation.Practical implicationsThe findings provide insights for corporate managers and policymakers. Strengthening board governance particularly in terms of independence, diversity and expertise can enhance the ethical and fiscal benefits of eco-innovation.Originality/valueThis study extends prior literature by adopting a comprehensive measure of eco-innovation that captures both technological and non-technological environmental activities. It distinguishes eco-innovation from corporate tax avoidance as two distinct strategic orientations and examines the governance mechanisms linking them. It also provides robust cross-country evidence showing that board efficiency strengthens this relationship across 48 countries.

Keywords: Tax avoidance; Eco-innovation; Board efficiency; Stakeholder theory; International evidence (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-12-2025-0537

DOI: 10.1108/ARJ-12-2025-0537

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