Corporate tax avoidance is drawing more attention as a growing concern within the ESG (Environmental, Social, and Governance) controversy. Many companies that publicly commit to ethical and sustainable practices are often criticized for using aggressive tax strategies, especially when they are already under scrutiny for ESG shortcomings. This conceptual paper examines the nexus between ESG controversies and corporate tax behavior, arguing that firms implicated in ESG related reputational risks may strategically adjust their tax practices to regain legitimacy. Grounded in legitimacy theory and greenwashing literature, we propose that companies facing ESG backlash might reduce tax avoidance or enhance tax transparency as a reputational repair mechanism. In this way, tax practices can be used as a tool to regain trust from the public, investors, and regulators. By synthesizing existing research, this paper highlights how ESG controversies can influence corporate tax decisions, a relationship underexplored in current literature. The findings call for deeper empirical investigation and policy discourse to bridge the gap between ESG performance and responsible tax conduct. Ultimately, this study underscores the need for corporate accountability, ensuring that firms align their tax strategies with their professed ESG commitments to uphold public and investor trust.
A Mon, study studied this question.
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