When boards go green: eco-innovation and corporate tax avoidance

Purpose This paper investigates the relationship between eco-innovation and corporate tax avoidance and examines the moderating role of board efficiency. It aims to determine whether firms that invest in environmentally sustainable innovation adopt more responsible fiscal strategies. Design/methodology/approach Using 63,710 firm-year observations from 48 countries covering the period 2002–2021, the study uses a range of panel econometric techniques to ensure robustness and address potential endogeneity concerns. Findings The results reveal that eco-innovation is negatively and significantly associated with corporate tax avoidance, indicating that firms actively engaging in eco-innovation adopt less aggressive fiscal strategies. Moreover, the results show that board efficiency strengthens the negative association between tax avoidance and eco-innovation. Practical implications The findings provide insights for corporate managers and policymakers. Strengthening board governance particularly in terms of independence, diversity and expertise can enhance the ethical and fiscal benefits of eco-innovation. Originality/value This study extends prior literature by adopting a comprehensive measure of eco-innovation that captures both technological and non-technological environmental activities. It distinguishes eco-innovation from corporate tax avoidance as two distinct strategic orientations and examines the governance mechanisms linking them. It also provides robust cross-country evidence showing that board efficiency strengthens this relationship across 48 countries.