ESG Practices, Tax Transparency, and Corporate Cash Tax Outcomes

Noviana Nur Ariyani; Umatun Markhumah

doi:10.69725/jipi.v1i4.324

Authors

Noviana Nur Ariyani a. Program of Accounting, Faculty of Communication and Business, Universitas Muhammadiyah Karanganyar, Karanganyar, Central Java, Indonesia, 57761
Umatun Markhumah b. Department of Accounting, Faculty of Communication and Business, Universitas Muhammadiyah Karanganyar, Karanganyar, Central Java, Indonesia, 57761

DOI:

https://doi.org/10.69725/jipi.v1i4.324

Keywords:

ESG practices, Tax transparency, Corporate tax behavior, Governance, Sustainability

Abstract

Purpose – We focus on how corporate tax outcomes are influenced by environmental, social and governance (ESG) practices, in particular we highlight the impact of tax transparency and tax governance disclosure as an important transmission mechanism. It responds to continued discussions about whether corporate tax should be included as part of responsible business in the ESG space.

Design/methodology/approach – We follow a hybrid research design that integrates perceptual measures of ESG and tax transparency with objective measures of tax outcomes. Partial least square-structural equation modeling is used to examine the direct, indirect and moderation effects in a model adopted in this study.

Findings – The findings show that the quality of governance, strategic ESG integration, and stakeholder pressure are positively related to corporate tax performance directly, and through improved tax transparency. Social practices affect tax liabilities but are realised through mechanisms of transparency, environmental practices have a direct influence. Tax transparency is found to be a key determinant of corporate tax behavior and the perception of enforcement strength does not significantly change this relationship.

Originality/value – This paper advances the literature by treating tax transparency as a separate governance measure not subsumed within ESG, thus providing greater theoretical insight into how responsible practices manifest in taxing behaviour.

Research Implications – The results have implications for the role of corporate governance and transparency in integrating sustainability strategies with the firm’s tax responsibility.

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Author Biographies

Noviana Nur Ariyani, a. Program of Accounting, Faculty of Communication and Business, Universitas Muhammadiyah Karanganyar, Karanganyar, Central Java, Indonesia, 57761

Noviana Nur Ariyani is an academic in the Department of Accounting, Communication, and Business at Universitas Muhammadiyah Karanganyar, Indonesia. Her scholarly interests encompass financial and management accounting, taxation, business communication, and corporate governance. Her research particularly focuses on tax compliance behavior, financial reporting quality, and the role of transparency and communication in strengthening organizational accountability. She adopts both empirical and conceptual research approaches, integrating accounting information systems with taxation and governance perspectives. Her work contributes to the development of accountable business practices and evidence-based policy discussions in the areas of accounting and public finance.
Umatun Markhumah, b. Department of Accounting, Faculty of Communication and Business, Universitas Muhammadiyah Karanganyar, Karanganyar, Central Java, Indonesia, 57761

Umatun Markhumah, S.E., S.H., M.Ak., CTC. is a lecturer and researcher in accounting and business studies with interdisciplinary academic qualifications in economics, law, and accounting. She is affiliated with Universitas Sebelas Maret and Universitas Muhammadiyah Karanganyar, Indonesia. Her research interests include taxation, financial accounting, corporate governance, and public finance, with a particular focus on tax compliance, tax justice, and regulatory effectiveness. Using quantitative and empirical research methods, her work contributes to evidence-based fiscal and accounting policy development in emerging economy contexts.

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