The Effect of Environmental, Social, and Governance (ESG) Performance on Tax Avoidance: Evidence from Companies Listed on Borsa Istanbul

Abstract

This study aims to examine the impact of ESG (environmental, social and governance) performance on tax avoidance, considering its sub-items. In the study, the data of 30 companies traded in the BIST 100 for the period 2018-2022 were obtained from Refinitiv Eikon and used. In analysing the relationship between variables, EKK, Two-Stage GMM and System GMM methods were used in panel data analysis. The Book Tax Difference method measures tax avoidance by reflecting the difference between accounting profit and taxable profit. The findings reveal that ESG general and ESG environmental scores are effective in reducing tax avoidance, while governance scores have limited effect and social scores have weak effect.