THE INFLUENCE OF ESG DISCLOSURE ON TAX AVOIDANCE (STUDY ON ESG LEADERS INDEX COMPANIES LISTED ON IDX IN 2019-2023)

Abstract

Maximizing profit is the primary goal of companies, which can lead to tax avoidance. However, ESG can be a solution to this issue because it supports transparency and ethical behavior. This study aims to determine the influence of ESG and each of its elements on tax avoidance, with leverage and RoA as control variables. The population of this study was companies in the ESG Leaders index listed on the IDX from 2019 to 2023. The data analyzed was obtained from financial statements, annual reports, and company sustainability reports with the number of samples collected as many as 70 samples that have been determined based on purposive sampling. In corporate culture theory, it is explained that companies will minimize activities that are not in accordance with the company's culture such as tax avoidance which in this case is considered an unethical action. Multiple linear regression was the method used to analyze the effects in this study. According to the data that has been analyzed using SPSS 27, it was found that the higher the ESG disclosure, the lower the tax avoidance level. This is also implemented for social disclosure and governance disclosure. Meanwhile, the higher the environmental disclosure, the higher the tax avoidance level.