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Environmental costs, environmental disclosure, and tax avoidance: evidence from mining and energy companies in Indonesia and Australia

Rima Kusuma Rini (Department of Accounting, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)
Desi Adhariani (Department of Accounting, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)
Dahlia Sari (Department of Accounting, Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia)

International Journal of Ethics and Systems

ISSN: 2514-9369

Article publication date: 8 June 2023

Issue publication date: 25 April 2024

795

Abstract

Purpose

This study aims to investigate the association between corporate tax avoidance and environmental costs and disclosure in Indonesia and Australia for the research period 2015–2019. This study also analyzes corporate strategies for overcoming public concerns about tax avoidance activities, namely, the trade-off legitimacy and risk reduction strategies, through two mechanisms: the mediation and moderation roles of environmental disclosure on the relationship between environmental costs and tax avoidance activities.

Design/methodology/approach

The data consists of 675 and 235 observations for Australia and Indonesia, respectively, which were analyzed quantitatively using panel regression.

Findings

The results showed that the trade-off legitimacy or risk reduction strategies are not found to be implemented by companies in Indonesia, while in Australia, corporations use the trade-off legitimacy strategy to reduce risk and overcome the negative impact of tax avoidance activities. The results also provide empirical evidence on the impact of environmental costs on environmental disclosure in both countries.

Originality/value

This study contributes to the literature by providing the latest evidence on the role of environmental costs on environmental disclosure, which has rarely been investigated in previous studies.

Keywords

Acknowledgements

The authors appreciate the constructive comments and feedback from the anonymous reviewers as well as lecturers at the Postgraduate Program in Accounting, Faculty of Economics and Business, Universitas Indonesia. The authors also appreciate the funding support from the Indonesia Ministry of Education through the Grant for Basic Research NKB-861/UN2.RST/HKP.05.00/2023.

Citation

Rini, R.K., Adhariani, D. and Sari, D. (2024), "Environmental costs, environmental disclosure, and tax avoidance: evidence from mining and energy companies in Indonesia and Australia", International Journal of Ethics and Systems, Vol. 40 No. 2, pp. 281-302. https://doi.org/10.1108/IJOES-01-2022-0017

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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