Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors
Abstract Corporate tax avoidance is a significant international issue, resulting in annual losses of USD 100–240 billion for governments globally. Understanding the relationship between firms’ corporate social responsibility (CSR) and tax avoidance activities is crucial to uncovering their motivatio...
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| Format: | Article |
| Language: | English |
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Springer Nature
2025-01-01
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| Series: | Humanities & Social Sciences Communications |
| Online Access: | https://doi.org/10.1057/s41599-024-04199-4 |
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| author | Akihiro Okuyama Shuichi Tsugawa Chiaki Matsunaga Shunsuke Managi |
| author_facet | Akihiro Okuyama Shuichi Tsugawa Chiaki Matsunaga Shunsuke Managi |
| author_sort | Akihiro Okuyama |
| collection | DOAJ |
| description | Abstract Corporate tax avoidance is a significant international issue, resulting in annual losses of USD 100–240 billion for governments globally. Understanding the relationship between firms’ corporate social responsibility (CSR) and tax avoidance activities is crucial to uncovering their motivations for tax avoidance. However, this relationship remains unclear. This study investigates firms’ tax payment motivations from environmental, social, and governance (ESG) perspectives by examining samples of firms with high, low, and no ESG-related reputational risk. We utilize the ESG index, which offers a broader scope than conventional CSR measures. Our empirical analysis includes 3981 firm-year observations from 31 OECD countries between 2017 and 2019. To determine the relationship between ESG and tax avoidance, we develop a reputation-based ESG risk dataset that addresses the endogeneity associated with managerial decisions and simultaneity bias. This study is among the few that explore the international relationship between ESG performance and tax avoidance, contributing to the shift from CSR to ESG in discussions of tax avoidance. Our findings reveal that companies’ tax payment behavior varies based on their ESG reputational risk. Specifically, firms with high ESG risk pay more taxes when their ESG risk is elevated, whereas firms with low ESG risk do not alter their tax payments based on ESG risk. Additionally, firms without any ESG risk tend to pay more taxes as their ESG scores increase. |
| format | Article |
| id | doaj-art-816ce15f36324e09b1ae228a50cb621c |
| institution | Kabale University |
| issn | 2662-9992 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Springer Nature |
| record_format | Article |
| series | Humanities & Social Sciences Communications |
| spelling | doaj-art-816ce15f36324e09b1ae228a50cb621c2025-02-02T12:13:01ZengSpringer NatureHumanities & Social Sciences Communications2662-99922025-01-0112111610.1057/s41599-024-04199-4Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factorsAkihiro Okuyama0Shuichi Tsugawa1Chiaki Matsunaga2Shunsuke Managi3Department of Civil and Environmental Engineering, Princeton UniversityFaculty of Economics, Ryukoku UniversityDepartment of Environmental Science, International College of Arts and Sciences, Fukuoka Women’s UniversityUrban Institute, Kyushu UniversityAbstract Corporate tax avoidance is a significant international issue, resulting in annual losses of USD 100–240 billion for governments globally. Understanding the relationship between firms’ corporate social responsibility (CSR) and tax avoidance activities is crucial to uncovering their motivations for tax avoidance. However, this relationship remains unclear. This study investigates firms’ tax payment motivations from environmental, social, and governance (ESG) perspectives by examining samples of firms with high, low, and no ESG-related reputational risk. We utilize the ESG index, which offers a broader scope than conventional CSR measures. Our empirical analysis includes 3981 firm-year observations from 31 OECD countries between 2017 and 2019. To determine the relationship between ESG and tax avoidance, we develop a reputation-based ESG risk dataset that addresses the endogeneity associated with managerial decisions and simultaneity bias. This study is among the few that explore the international relationship between ESG performance and tax avoidance, contributing to the shift from CSR to ESG in discussions of tax avoidance. Our findings reveal that companies’ tax payment behavior varies based on their ESG reputational risk. Specifically, firms with high ESG risk pay more taxes when their ESG risk is elevated, whereas firms with low ESG risk do not alter their tax payments based on ESG risk. Additionally, firms without any ESG risk tend to pay more taxes as their ESG scores increase.https://doi.org/10.1057/s41599-024-04199-4 |
| spellingShingle | Akihiro Okuyama Shuichi Tsugawa Chiaki Matsunaga Shunsuke Managi Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors Humanities & Social Sciences Communications |
| title | Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors |
| title_full | Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors |
| title_fullStr | Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors |
| title_full_unstemmed | Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors |
| title_short | Companies adjust tax payments to offset changes in publicly perceived impact on environment, social, and governance factors |
| title_sort | companies adjust tax payments to offset changes in publicly perceived impact on environment social and governance factors |
| url | https://doi.org/10.1057/s41599-024-04199-4 |
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