Different Pathways to Firm Value: ESG Disclosure, Corporate Governance, and Tax Avoidance

Agustin Palupi; Elisabeth Tri Aryanti Istimawani

doi:10.61255/jeemba.v4i5.2071

Authors

Agustin Palupi Trisakti School of Management, Indonesia
Elisabeth Tri Aryanti Istimawani Trisakti School of Management, Indonesia

DOI:

https://doi.org/10.61255/jeemba.v4i5.2071

Keywords:

Board Independence, Sustainability Reporting, Tax Behavior, Governance Monitoring, Indonesian Manufacturing Firms

Abstract

Despite growing interest in ESG disclosure and corporate governance, limited evidence explains how they are associated with firm value through tax-related behavior, particularly in emerging markets. This study examines the associations of ESG disclosure and corporate governance with firm value and explores tax avoidance as a potential intervening mechanism. Using 324 firm-year observations from Indonesian manufacturing firms during 2023–2025, the study employs panel-data regression using the Common Effect Model. ESG disclosure is measured through content analysis, while corporate governance is represented by board independence, board meeting frequency, and audit committee size. The findings show that board independence is positively associated with firm value, whereas ESG disclosure, board meetings, and audit committee size show no significant direct associations. ESG disclosure is positively associated with tax avoidance, while the governance attributes are not. Predicted tax avoidance is positively associated with firm value. These findings indicate distinct pathways to firm value: a direct governance-monitoring channel through board independence and a possible disclosure–tax behavior pathway involving ESG disclosure. The study highlights the importance of considering the consistency between sustainability disclosure and firms’ substantive financial behavior.

Abstract views: 123 ,

PDF downloads: 72

Downloads

Download data is not yet available.

References

An, H., Ran, C., & Gao, Y. (2025). Does ESG information disclosure increase firm value? The mediation role of financing constraints in China. Research in International Business and Finance, 73, 102584. https://doi.org/10.1016/j.ribaf.2024.102584

Anggraini, Pingkan, And Ickhsanto Wahyudi. 2022. “Pengaruh Reputasi Perusahaan, Environmental, Social And Governance Dan Kualitas Audit Terhadap Tax Avoidance.” Fair Value: Jurnal Ilmiah Akuntansi Dan Keuangan 5 (2): 643–649. Https://Doi.Org/10.32670/Fairvalue.V5i2.2120.

Arinta, Yusvita, And IAIN Salatiga. 2019. “Pengaruh Corporate Gorvenance Islam Terhadap Tax Avoidance.” BISNIS : Jurnal Bisnis Dan Manajemen Islam 6 (2): 69-86. Https://Doi.Org/10.21043/Bisnis.V6i2.4570.

Armstrong, C. S., Blouin, J. L., Jagolinzer, A. D., & Larcker, D. F. (2015). Corporate governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1), 1–17. https://doi.org/10.1016/j.jacceco.2015.02.003

Brick, I. E., & Chidambaran, N. K. (2010). Board meetings, committee structure, and firm value. Journal of Corporate Finance, 16(4), 533–553. https://doi.org/10.1016/j.jcorpfin.2010.06.003

Dang, Van Cuong, And Quang Khai Nguyen. 2022. “Audit Committee Characteristics And Tax Avoidance: Evidence From An Emerging Economy.” Cogent Economics & Finance 10 (1): 2023263. Https://Doi.Org/10.1080/23322039.2021.2023263.

Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91. https://doi.org/10.2307/258887

Elamer, A. A., Boulhaga, M., & Ibrahim, B. A. (2024). Corporate tax avoidance and firm value: The moderating role of environmental, social, and governance (ESG) ratings. Business Strategy and the Environment, 33(7), 7446–7461. https://doi.org/10.1002/bse.3881

Fauzan, Fauzan, Dyah Ayu Ayu, And Nashirotun Nisa Nurharjanti. 2019. “The Effect Of Audit Committee, Leverage, Return On Assets, Company Size, And Sales Growth On Tax Avoidance.” Riset Akuntansi Dan Keuangan Indonesia 4 (3): 171–185. Https://Doi.Org/10.23917/Reaksi.V4i3.9338.

Hasan, Arshad, Waqas Anwar, Muhammad Kaleem Zahir-Ul-Hassan, And Ammad Ahmed. 2024. “Corporate Governance And Tax Avoidance: Evidence From An Emerging Market.” Applied Economics 56 (22): 2688–2704. Https://Doi.Org/10.1080/00036846.2023.2198195.

Hidayat, Luthfia Nadaa, And Vinola Herawaty. 2024. "Peran Good Corporate Governance Dalam Memoderasi Pengaruh Ceo Power, Pengungkapan Esg, Dan Kinerja Keuangan Terhadap Tax Avoidance". Jurnal Masharif al-Syariah: Jurnal Ekonomi dan Perbankan Syariah 9 (5): 639-657.https://doi.org/10.30651/jms.v10i1.25651

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X

Makatita, Grace Gloria, And Barlia Annis Syahzuni. 2025. Tax Avoidance: Board Characteristics, Financial Distress, Dan Company Size. E-Jurnal Akuntansi Tsm 5 (4): 367-388.https://jurnaltsm.id/index.php/EJATSM.

Maulana, Rifqi, And Andry Sugeng. 2026. “Pengaruh Good Corporate Governance Dan Tekanan Keuangan Terhadap Tax Avoidance.” Riggs: Journal Of Artificial Intelligence And Digital Business 5 (1): 5322–5334. Https://Doi.Org/10.31004/Riggs.V5i1.6393.

Mita,Dewi., Noor. 2019. “Pengaruh Kepemilikan Institusional, Dewan Komisaris Independen Dan Komite Audit Terhadap Penghindaran Pajak (Tax Avoidance) Pada Perusahaan Perbankan Yang Terdaftar Di Bursa Efek Indonesia Periode 2012-2016.” MAKSIMUM 9 (1): 40-51. Https://Doi.Org/10.26714/Mki.9.1.2019.

Mukhtaruddin, Agil Novriansa, And Hani Maria Angel Siahaan. 2025. “Environmental, Social And Governance, And Tax Avoidance: Study In ASEAN Countries.” Asian Economic And Financial Review 15 (6): 996–1010. Https://Doi.Org/10.55493/5002.V15i6.5458.

Oktiani, Feronika, And Aris Sanulika. 2024. “Implementasi Strategi Bisnis Dan Pengungkapan Esg Terhadap Tax Avoidance.” S E 1 (1):1-18.

Palupi, A., & Istimawani, E. T. A. (2025). Political influence, tax strategy, and managerial opportunism in financial reporting. Global Research Review in Business and Economics, 11(4), 26–32. https://doi.org/10.56805/grrbe

Pandapotan, Fransisco, Nuraenie Oktavianthie, And Erna Setiany. 2024. Board Characteristics, Audit Quality And CEO Narcissism On Tax Avoidance: Evidence From Consumer Staples In Indonesia And Australia. Review of Integrative Business and Economics Research 13(3): 322-335.

Pratama, Maria Kezia, And Rutji Satwiko. 2024. Pengaruh Corporate Governance, Financial Performance Dan Faktor Lainnya Terhadap Tax Avoidance. E-Jurnal Tsm 4 (2): 563-578. https://jurnaltsm.id/index.php/EJATSM.

Rahat, B., & Nguyen, P. (2024). The impact of ESG profile on firm's valuation in emerging markets. International Review of Financial Analysis, 95, 103361. https://doi.org/10.1016/j.irfa.2024.103361

Salihu, Ibrahim, And Farahiyah Kawi. 2021. “Board Attributes And Corporate Tax Avoidance: An Explanatory Mixed Method Investigation.” Journal Of Accounting And Taxation 13 (4): 291–303. Https://Doi.Org/10.5897/JAT2021.0455.

Tan, W., Cai, Y., Luo, H., Zhou, M., & Shen, M. (2024). ESG, technological innovation and firm value: Evidence from China. International Review of Financial Analysis, 96, 103546. https://doi.org/10.1016/j.irfa.2024.103546

Tanjaya, Christili, And Nazmel Nazir. 2021. “Pengaruh Profitabilitas, Leverage, Pertumbuhan Penjualan, Dan Ukuran Perusahaan Terhadap Penghindaran Pajak Pada Perusahaan Manufaktur Sektor Barang Konsumsi Yang Terdaftar Di Bei Tahun 2015-2019.” Jurnal Akuntansi Trisakti 8 (2): 189–208. Https://Doi.Org/10.25105/Jat.V8i2.9260.

Tanujaya, Kennardi, Dewi Ratna, And Iwan Suhardjo. 2021. “Pengaruh Struktur Kepemilikan, Karakteristik Dewan, Dan Kesulitan Finansial Terhadap Penghindaran Pajak.” Global Financial Accounting Journal 5 (2): 171-186. Https://Doi.Org/10.37253/Gfa.V5i2.6094.

Vafeas, N. (1999). Board meeting frequency and firm performance. Journal of Financial Economics, 53(1), 113–142. [https://doi.org/10.1016/S0304-405X(99)00018-5](https://doi.org/10.1016/S0304-405X%2899%2900018-5)

William, Theofilus, And Suryanto. 2025. “Faktor-Faktor Yang Mempengaruhi Tax Avoidance.” E-Jurnal Akuntansi Tsm 5 (4): 413-430. https://jurnaltsm.id/index.php/EJATSM.

Yuan, W., Zhang, M., Guo, X., & Jiang, Y. (2025). ESG disclosure and firm long-term value: The mediating effect of tax avoidance. Finance Research Letters, 83, 107728. https://doi.org/10.1016/j.frl.2025.107728