Does the presence of a sustainability committee strengthen the impact of ESG disclosure on tax aggressiveness? Insights from North America

Supun Chandrasena (), Lane Matthews and Ali Meftah Gerged
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Supun Chandrasena: Queen’s University Belfast
Lane Matthews: Queen’s University Belfast
Ali Meftah Gerged: Sheffield University Management School, The University of Sheffield

Review of Quantitative Finance and Accounting, 2025, vol. 65, issue 3, No 5, 1039-1065

Abstract: Abstract We investigate the influence of ESG disclosure on tax aggressiveness within the North American Travel and Leisure (T&L) sectors, specifically examining the role of sustainability committees in this relationship. Our analysis utilizes longitudinal panel data from the USA B3000 and Canadian S&P/TSX indices over the period from 2010 to 2020. Employing fixed-effects panel quantile regression with two distinct measures of tax aggressiveness, our findings indicate that firms with a focus on ESG tend to display higher levels of tax aggressiveness. This suggests that some companies might use strong ESG performance as a facade to obscure aggressive tax strategies. Moreover, our research introduces new evidence that the existence of sustainability committees can both hinder corporate tax aggressiveness and foster an ethical corporate culture, which aligns higher ESG engagement with lower tax aggressiveness. Our study underscores the importance of fostering tax compliance in T&L companies, emphasizing that individuals and corporations, which often seek direct state benefits, regard robust public services as essential for encouraging adherence to tax regulations. Furthermore, sustainability committees play a crucial role in enabling firms to address broader social issues, including tackling tax aggressiveness, thus shaping their sustainability agendas.

Keywords: Environmental; social and corporate governance (ESG) disclosure; Sustainability committee; Sustainability; Travel and leisure sector; North America; Tax aggressiveness; H26; M14; G34; M49; Q01 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11156-024-01368-z

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