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The Relationship between Tax Avoidance and ESG Ratings

Furrer, Rebeka Angelika LU (2022) EKHS42 20221
Department of Economic History
Abstract
This study investigates the relationship between tax avoidance and corporate responsibility
measured through ESG ratings among Swiss listed companies between 2010 and 2019. In the
first part of the analysis, the aim is to identify whether Swiss firms provide evidence for the
corporate culture theory, which considers that tax payments and CSR/ESG activities are
complements, or for the risk management theory, according to which tax payments and
CSR/ESG activities act as substitutes. The second part of the analysis focuses on the role of
profitability and tries to identify whether the relationship between tax avoidance and corporate
responsibility changes with varying levels of firm performance.
The obtained results show that Swiss... (More)
This study investigates the relationship between tax avoidance and corporate responsibility
measured through ESG ratings among Swiss listed companies between 2010 and 2019. In the
first part of the analysis, the aim is to identify whether Swiss firms provide evidence for the
corporate culture theory, which considers that tax payments and CSR/ESG activities are
complements, or for the risk management theory, according to which tax payments and
CSR/ESG activities act as substitutes. The second part of the analysis focuses on the role of
profitability and tries to identify whether the relationship between tax avoidance and corporate
responsibility changes with varying levels of firm performance.
The obtained results show that Swiss companies who disclose ESG data in the analysed time
period provide evidence for the risk management theory, where an increased ESG rating is, on
average, associated with higher levels of tax avoidance. While this result is strongest for firms
below a certain profitability threshold, the relationship weakens with increasing profitability,
confirming the results of previous studies. (Less)
Please use this url to cite or link to this publication:
author
Furrer, Rebeka Angelika LU
supervisor
organization
course
EKHS42 20221
year
type
H2 - Master's Degree (Two Years)
subject
keywords
Tax avoidance, Corporate responsibility, ESG ratings, Effective tax rate, Swiss listed companies, Firm profitability
language
English
id
9096211
date added to LUP
2022-08-16 10:57:29
date last changed
2022-08-22 11:37:43
@misc{9096211,
  abstract     = {{This study investigates the relationship between tax avoidance and corporate responsibility
measured through ESG ratings among Swiss listed companies between 2010 and 2019. In the
first part of the analysis, the aim is to identify whether Swiss firms provide evidence for the
corporate culture theory, which considers that tax payments and CSR/ESG activities are
complements, or for the risk management theory, according to which tax payments and
CSR/ESG activities act as substitutes. The second part of the analysis focuses on the role of
profitability and tries to identify whether the relationship between tax avoidance and corporate
responsibility changes with varying levels of firm performance.
The obtained results show that Swiss companies who disclose ESG data in the analysed time
period provide evidence for the risk management theory, where an increased ESG rating is, on
average, associated with higher levels of tax avoidance. While this result is strongest for firms
below a certain profitability threshold, the relationship weakens with increasing profitability,
confirming the results of previous studies.}},
  author       = {{Furrer, Rebeka Angelika}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Relationship between Tax Avoidance and ESG Ratings}},
  year         = {{2022}},
}