ESG Rating And Tax Avoidance

In the context of global warming,entities are increasingly concerned about the enviro nmental,social and corporate governance(ESG)performance of enterprises.ESG rati ng,as important non-financial information,is an important consideration for every co mpany to take into account in its production and financial decisions.Tax avoidance by enterprises is a common phenomenon,and a large loss of tax revenue can cause a decrease in fiscal revenue.In this context,it is of great theoretical and practical si gnificance to study the influence of ESG ratings on corporate tax avoidance.This pa per explores the relationship between ESG ratings and corporate tax avoidance as wel l as the underlying mechanism based on combing and summarizing the existing resea rch results.This paper systematically investigates the impact of ESG ratings of A-share listed companies on corporate tax avoidance from 2012 to 2020 and its mechanism of action using a multitemporal double difference model in the context of ESG ratings of Chinese listed companies announced by third-party rating agencies in 2015.It is found that:(1)ESG ratings significantly inhibit corporate tax avoidance after publication,and the findings still hold after a series of robustness tests;(2)the increase in stock liquidity caused by ESG ratings publication is an important way to reduce corporate tax avoidance;(3)the inhibitory effect of ESG ratings on corporate tax avoidance is persistent and tends to increase over time;(4)There is some heterogeneity in the effect of ESG rating on corporate tax avoidance,and the inhibitory effect of ESG rating on corporate tax avoidance is more obvious when the listed company is a stateowned enterprise,has low equity concentration,has low analyst attention,and has not disclosed corporate social responsibility reports as required in previous years.Capital market regulators,tax authorities,analysts and other subjects can gain many policy insights from the findings of this paper: First,regulators should establish a sound ESG rating disclosure system and continuously improve the information disclosure system to reduce the information asymmetry between listed companies and stakeholders.Second,stock exchanges should continuously improve the basic capital market system to release market vitality and enhance stock liquidity.Third,tax authorities can use important non-financial information such as ESG rating information to strengthen the tax collection and management of enterprises.Fourth,the role of external supervision of analysts should be brought into full play to give full play to the professional advantages and information advantages of analysts to improve the information transparency of listed companies in the capital market and promote the improvement of their stock liquidity.