Moderating the relationship between ESG performance and tax avoidance
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2022-07-21
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en
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This master thesis aims to research the relation between ESG performance and tax avoidance and how national culture, industry sensitivity, and board effectiveness moderate this relation. National culture and board effectiveness both have a significant effect on this relation, industry sensitivity has no significant moderating effect. To study this relation, a panel data analysis has been conducted consisting of 1,265 companies from 34 countries from 2011 to 2020. The total observations vary between 11,863 and 13,893.
The results confirm that ESG performance is negatively related to tax avoidance, thus meaning that companies that have better ESG performance are less likely to avoid taxes.
The moderating variables of national culture, industry sensitivity, and board effectiveness significantly alter the relation between ESG performance and tax avoidance. National culture is measured by the six cultural dimensions of Hofstede and some of the dimensions negatively moderate the relation and some positively.
Industry sensitivity negatively moderates the relationship between ESG performance and tax avoidance.
Higher board effectiveness moderates the relation to be more negative. It makes the effect that ESG performance has on tax avoidance more negative and thus strengthen the relationship by making it more negative.
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Faculteit der Managementwetenschappen