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Integrated reporting quality and corporate tax avoidance practices in South Africa’s listed companies

Augustine Donkor (School of Business, Sheridan Institute of Higher Education, Perth, Australia)
Hadrian Geri Djajadikerta (School of Business and Law, Edith Cowan University, Perth, Australia)
Saiyidi Mat Roni (School of Business and Law, Edith Cowan University, Perth, Australia)
Terri Trireksani (Murdoch Business School, Murdoch University, Perth, Australia)

Sustainability Accounting, Management and Policy Journal

ISSN: 2040-8021

Article publication date: 25 January 2022

Issue publication date: 25 May 2022

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Abstract

Purpose

This study aims to examine the relationship between integrated reporting (IR) quality and corporate tax avoidance (CTA). IR is an emerging reporting mechanism, while CTA practices are considered a hindrance to inclusive and sustainable growth. The study also assesses the moderating role of firm complexity on the IR-CTA relationship. Additionally, this study also envisages that CTA practices are not static. Hence, it also analyses the IR-CTA relationship across different intensity levels of CTA practices. The study focusses on listed companies in South Africa, the only country that has mandated IR practice so far.

Design/methodology/approach

Ordinary least square and quantile regressions are used to analyse archival and content analysis data for firms listed on the Johannesburg Stock Exchange from 2011 to 2017.

Findings

This study finds that IR quality negatively associates firms CTA practices. It further concludes that although firms’ transparency level increases due to IR quality, firm complexity reduces the significant negative relationship between IR and CTA practices. The findings also indicate that the IR-CTA relationship is not constant but instead differs across the CTA quantiles. At aggressive levels of CTA, no relationship is established between IR quality and firms’ CTA practices.

Practical implications

The findings provide a useful and more detailed description of the relationship between information quality and CTA practice, focussing on IR, an emerging reporting mechanism that is considered innovative and transparent.

Social implications

Considering the IR-CTA relationship found in this study, IR quality implementation may indirectly contribute to attaining sustainable development goals by reducing CTA practices.

Originality/value

This study examines the relationship between reporting quality and firms’ CTA practices from the perspectives of an emerging reporting mechanism, with a focus on South Africa, the only country that has mandated IR practice. Furthermore, the distributional mean effects of IR quality on firms’ CTA practices explored in this study extend beyond the usual IR-CTA relationship.

Keywords

Citation

Donkor, A., Djajadikerta, H.G., Mat Roni, S. and Trireksani, T. (2022), "Integrated reporting quality and corporate tax avoidance practices in South Africa’s listed companies", Sustainability Accounting, Management and Policy Journal, Vol. 13 No. 4, pp. 899-928. https://doi.org/10.1108/SAMPJ-03-2021-0116

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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