Title: Tax Avoidance and Sustainability Reporting: Alignment or Greenwashing Strategy?

Authors:

1. Mohammad Nasih
2. Iman Harymawan
3. Siti Zaleha Abdul Rasid
4. Fajar Kristanto Gautama Putra

Department: Akuntansi

Journal Name: Corporate Social Responsibility and Environmental Management

Kinds of Journal: Top tier

Keywords: ESG reporting, corporate sustainability, green, washing, sustainability reporting, tax avoidance

Abstract:

This study examines the relationship between sustainability reporting and tax avoidance, distinguishing genuine alignment with environmental and social commitments from greenwashing strategies. We also examine the impact of tax amnesty programs on these reporting motives. Using Indonesian nonfinancial listed firms in the 2010–2018 period, this study reveals that these firms employ sustainability reporting as a means of impression management to conceal their tax avoidance practices. Moreover, we document a negative relationship between sustainability reporting and tax avoidance when the firms participate in the tax amnesty program. Our findings are robust, and we provide several additional analyses to expand our contribution. Lastly, our study is believed to be one of the few that focuses on providing empirical evidence on how sustainability reporting is utilized as a “smokescreen” of tax avoidances.

For details: https://doi.org/10.1002/csr.2927