Investigating the impacts of ESG on corporate tax avoidance behaviors

Abstract

his article examines the impact of environmental, social and governance (ESG) activities on tax
avoidance behavior of non-financial enterprises listed in four emerging markets including Brazil, Russia, China
and India (BRIC countries) over the 2010-2020 period. Using a quantitative method for panel data including
2,372 observations, empirical results show that businesses that perform well on environmental (E) and social (S)
activities are less likely to engage in tax avoidance. Meanwhile, the impact of corporate governance (G) is not
statistically significant. The research results ensure robustness when controlling the endogeneity issue using the
sysGMM regression technique. The empirical evidence on the negative relationship between the implementation
of environmental and social responsibility and tax avoidance has important implications for policymakers
in promulgating policies to promote environmentally and socially responsible initiatives in order to mitigate
corporate tax avoidance.