ESG performance and cash effective tax rates: Evidence from UK listed firms

IF 3.3 Q1 BUSINESS, FINANCE

Journal of International Accounting Auditing and Taxation Pub Date : 2025-01-28 DOI:10.1016/j.intaccaudtax.2025.100683

Nouf Binhadab

引用次数: 0

Abstract

This paper investigates the relationship between cash effective tax rates (ETRs) and environmental, social, and governance (ESG) performance using a firm level analysis of the Financial Times Stock Exchange 100 (FTSE 100) and FTSE 250 firms. The findings show a positive correlation between ESG performance and cash ETRs. The findings are robust to an instrumental variable approach that controls for the potential endogeneity between ESG performance and cash ETRs. For non-financial firms, this positive correlation between ESG performance and cash ETRs is particularly driven by the environmental aspect of ESG performance, whereas it is driven by the social and governance aspects of ESG performance for financial firms. Additional analysis indicates that the corporate social responsibility (CSR) strategy dimension, which measures a firm’s integration of CSR aspects into its daily decision making, has a positive impact on cash ETRs. The findings seem to suggest that corporate culture can influence tax strategies.

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来源期刊

Journal of International Accounting Auditing and Taxation BUSINESS, FINANCE-

CiteScore

4.50

自引率

3.80%

发文量

期刊介绍： The Journal of International Accounting, Auditing and Taxation publishes articles which deal with most areas of international accounting including auditing, taxation and management accounting. The journal''s goal is to bridge the gap between academic researchers and practitioners by publishing papers that are relevant to the development of the field of accounting. Submissions are expected to make a contribution to the accounting literature, including as appropriate the international accounting literature typically found in JIAAT and other primary US-based international accounting journals as well as in leading European accounting journals. Applied research findings, critiques of current accounting practices and the measurement of their effects on business decisions, general purpose solutions to problems through models, and essays on world affairs which affect accounting practice are all within the scope of the journal.