The Impact of ESG Disclosure on Corporate Tax Avoidance: Evidence from Publicly Listed Companies
Abstract
This study investigates the effect of Environmental, Social, and Governance (ESG) disclosure on corporate tax avoidance among publicly listed companies. Using a quantitative approach, data were collected from 85 retail investors through a structured questionnaire measured on a five-point Likert scale and analyzed using SPSS version 25. The results show that ESG disclosure has a significant negative effect on corporate tax avoidance, with a regression coefficient of -0.589 and a significance value of 0.000. The coefficient of determination (R²) indicates that ESG disclosure explains 35.5% of the variation in corporate tax avoidance. These findings suggest that companies with higher ESG disclosure are perceived as less likely to engage in aggressive tax avoidance practices. The results support Stakeholder Theory and Legitimacy Theory, highlighting that transparency in sustainability reporting promotes responsible corporate behavior and strengthens stakeholder trust. This study contributes to the ESG and taxation literature from the perspective of retail investors and provides practical implications for managers, regulators, and investors in fostering sustainable governance and ethical tax practices.
Keywords
ESG Disclosure
Corporate Tax Avoidance
Sustainability Reporting
Stakeholder Theory
Retail Investors
References
- Baatwah, S. R., & Hussainey, K. (2023). Does expanded disclosure in the audit report involve unintended consequences? Evidence from tax avoidance. In … of Accounting & …. Emerald Group Publishing Ltd.
- Budiarto, S. D., & Achyani, F. (2023). The effect of accounting conservatism, sales growth, institutional ownership, company size, and political connections to tax avoidance with audit quality as a moderating variable. International Journal of Latest Research in Humanities and Social Science, 6(3), 170–176.
- Challoumis-Κωνσταντίνος Χαλλουμής, C. (2024). ComBaTing TaX avoidanCe: eu and greeK measures for fair CorporaTe TaXaTion. Available at SSRN.
- De Silva Lokuwaduge, C., Smark, C., & Mir, M. (2022). The surge of environmental social and governance reporting and sustainable development goals: some normative thoughts. Australasian Accounting, Business and Finance Journal, 16(2), 3–11.
- Dogru, T., Line, N., Mody, M., Hanks, L., Abbott, J., Acikgoz, F., Assaf, A., Bakir, S., Berbekova, A., Bilgihan, A., Dalton, A., Erkmen, E., Geronasso, M., Gomez, D., Graves, S., Iskender, A., Ivanov, S., Kizildag, M., Lee, M., … Zhang, T. (2023). Generative Artificial Intelligence in the Hospitality and Tourism Industry: Developing a Framework for Future Research. Journal of Hospitality & Tourism Research, 10963480231188664. https://doi.org/10.1177/10963480231188663
- Fadhilah, S. H., Agustin, S., Rosyidah, D. M., Rusdiansyah, N., Fadhilah, N. H. K., Riany, M., & Bahri, N. A. (2023). Effect of Firm Size and Capital Intensity on Tax Avoidance with Corporate Social Responsibility as Moderating Variables. International Conference on Economics, Management and Accounting (ICEMAC 2022), 77–89.
- Fujianti, L., Azizah, W., & Rizal, N. (2024). The double-edged sword of transparency: ESG disclosure’s effect on competitive dynamics in manufacturing. Edelweiss Applied Science and Technology, 8(6), 1735–1750.
- Kakunsi, I. M., Kalangi, L., & Wangkar, A. (2025). Pengaruh digital perpajakan dan self-assessment system terhadap perilaku tax avoidance pada usaha kecil menengah di Jalan Flamboyan Manado. Riset Akuntansi Dan Portofolio Investasi, 3(2), 483–490.
- Kurniasih, L., Yusri, Y., Kamarudin, F., & Sheikh Hassan, A. F. (2023). The role of country by country reporting on corporate tax avoidance: Does it effective for the tax haven? Cogent Business & Management, 10(1), 2159747.
- Lungu, C., Burcă, V., Bunget, O. C., & ... (2023). … Tax Avoidance. A Bibliometric Review of Literature and Early Evidence on the European Union, from the Perspective of Tax-Related Key Audit Matters …. In Journal of Risk and …. mdpi.com. https://www.mdpi.com/1911-8074/16/8/345
- Makridou, G., Doumpos, M., & Lemonakis, C. (2023). Relationship between ESG and corporate financial performance in the energy sector: empirical evidence from European companies. International Journal of Energy Sector Management, ahead-of-p(ahead-of-print). https://doi.org/10.1108/IJESM-01-2023-0012
- Nicholls, A. (2010). The legitimacy of social entrepreneurship: Reflexive isomorphism in a pre–paradigmatic field. Entrepreneurship Theory and Practice. https://doi.org/10.1111/j.1540-6520.2010.00397.x
- Novita Sari., Achmad Hizazi., W. (2021). Effect of Good Corporate Governance and Leverage on Profitability-Mediated Tax Avoidance (Study on Mining Companies listed on the Indonesia Stock Exchange 2016 – 2019). International Journal of Academic Research in Accounting Finance and Management Sciences, 11(2), 202–221. https://doi.org/10.6007/IJARAFMS
- Pittroff, E. (2021). The legitimacy of global accounting rules : a note on the challenges from path ‑ dependence theory. Journal of Management and Governance, 25(2), 379–396. https://doi.org/10.1007/s10997-020-09546-6
- Prayogo, Y., Mutia, A., Hardiningsih, P., & Setiawati, I. (2023). The Relationship of Sustainability Report with Firm Values Jakarta Islamic Index. Jabe (Journal of Accounting and Business Education), 8(2), 99. https://doi.org/10.17977/jabe.v8i2.46032
- Rachev, S., & Lindquist, W. B. (2023). Editorial on the Volume “ESG Investing and ESG Finance.” Journal of Risk and Financial Management. https://www.mdpi.com/1911-8074/16/10/422
- Spear, R., Cornforth, C., & Aiken, M. (2009). The governance challenges of social enterprises: evidence from a UK empirical study. Annals of Public and …. https://doi.org/10.1111/j.1467-8292.2009.00386.x
- Tasci, A. D. A. (2021). A critical review and reconstruction of perceptual brand equity. International Journal of Contemporary Hospitality Management, 33(1), 166–198. https://doi.org/10.1108/IJCHM-03-2020-0186
- Zhang, L., Yang, X., Zhu, S., & Xia, Z. (2023). Business Model Innovation and Performance of Startups: The Moderating Role of External Legitimacy. In Sustainability (Vol. 15, Issue 6). https://doi.org/10.3390/su15065351
- Zhang, Y., & Song, Y. (2022). Tax rebates, technological innovation and sustainable development: Evidence from Chinese micro-level data. Technological Forecasting and Social Change. https://www.sciencedirect.com/science/article/pii/S0040162522000130
How to Cite
Judijanto, L., Barus, I. I., Arum, M., Rahman, K., & Warsono, W. (2026). The Impact of ESG Disclosure on Corporate Tax Avoidance: Evidence from Publicly Listed Companies. Review of Taxation and Public Finance, 1(1), 11–19. Retrieved from https://badrionpress.com/index.php/rtpf/article/view/21
Copyright & License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
© 2026 Loso Judijanto, Irwan Irawadi Barus, Mega Arum, Kristanti Rahman, Warsono Warsono
