Does Environmental, social, and governance disclosure moderate gender diversity - Tax avoidance Nexus?

Abstract

The aim of this study is to explore the relationship between Environmental, social, and governance (ESG) disclosure, board gender diversity (BGD), and tax avoidance. The findings indicate that having female directors on boards improves ESG disclosure and decreases tax avoidance. In particular, this study aims to empirically investigate how ESG affects the relationship between BGD and tax avoidance. This study investigates a panel dataset comprising 350 UK-listed firms from 2013 to 2022. The findings show that in companies where ESG disclosure is more aligned with GRI guidelines, the negative correlation between tax avoidance and gender board diversity is stronger. The findings indicate that implementing gender quotas for directors can lead to a decrease in tax avoidance and an increase in a company's focus on ESG disclosure, ultimately enhancing the company's reputation.