Designation as the Most Admired Firms to the Sustainable Management of Taxes: Evidence from South Korea

Jaehong Lee, Suyon Kim and Eunsoo Kim
Additional contact information
Jaehong Lee: College of Software and Management, Kyonggi University, Suwon 16227, Korea
Suyon Kim: Department of Accounting, Jeonbuk National University, Jeonju 54896, Korea
Eunsoo Kim: College of Business, Sangmyung University, Seoul 03016, Korea

Sustainability, 2021, vol. 13, issue 14, 1-17

Abstract: This study examines whether the designation as the most admired firms affects firms’ tax management behavior. Based on 6880 Korean firms from 2014 to 2018, we regressed to analyze the relationship between the designation as the most admired firms and tax avoidance. Designation as the most admired firm is considered to result in a high reputation, and reputation is one of the intangible assets when assessing the firm value. We found that the firms designated as the most admired firms are reluctant to avoid taxes. Reputable firms are expected to be consistent with their fame. Therefore, those firms are less engaged in unethical or immoral tax avoidance. We also found a positive effect of the index for environmental, social, and governance on the relationship between the designation as the most admired firms and tax avoidance. Environmental, social, and governance activities are the managements’ choice and are a part of corporate activities, whereas firms’ reputations result from enterprise-wide activities. The findings suggest that the designation as the most admired firms with regard to environmental, social, and governance activities is considered highly reputable and results in deciding to improve corporate sustainability in tax management. The relationship between the designation as the most admired firms and tax avoidance is strengthened in an information environment where the firms are Chaebol-affiliated and in high information asymmetry.

Keywords: designation as the most admired firms; ESG; tax management; reputation (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 (1)

Downloads: (external link)
https://www.mdpi.com/2071-1050/13/14/7994/pdf (application/pdf)
https://www.mdpi.com/2071-1050/13/14/7994/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:14:p:7994-:d:596191

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().