Board characteristics and tax avoidance: the moderating effect of ESG disclosure

This study examines the impact of board governance characteristics on tax avoidance (TA). Moreover, it also explores the moderating impact of environmental, social and governance index disclosure (ESGD) on this association. The research is based on a dataset of non-financial companies listed on the Egyptian Exchange (EGX) from 2018 to 2022, encompassing a final selection of 85 firms with a collective total of 425 firm-year observations. Statistical analysis was carried out using pooled ordinary least squares (OLS) and fixed effects (FEs) regression models. The study results revealed a significant negative impact of board governance characteristics on TA. Additionally, ESGD is identified to play a positive moderating role. These findings carry relevance for Egyptian companies, regulators and investors in Egypt and similar emerging markets. Companies are encouraged to prioritize the inclusion of independent members, promote gender diversity and Chief Executive Officer (CEO) duality in board appointments, regulators need to ensure compliance with board governance guidelines for all listed companies. Investors are advised to focus on boards that adhere to governance standards and exhibit high levels of ESGD. This research contributes to the body of knowledge by exploring the moderating impact of ESGD in a novel context, specifically within Egypt, thereby addressing a gap in existing literature.