Corporate Tax Disclosure Strategies in Sustainability Reporting

ABSTRACTDrawing on virtue ethics, this paper explores how corporate virtues influence sustainability performance and whether this, in turn, affects tax disclosure. Using a sample of 339 companies from the 2021 Fortune Global 500 list, our findings indicate that corporate virtues significantly drive sustainability performance. Furthermore, companies with higher sustainability performance are more likely to include tax disclosures in their sustainability reports. The findings suggest that tax transparency is not merely a compliance‐driven practice but a reflection of a company's commitment to the common good. By positioning tax disclosure as an extension of corporate virtues, this research enriches the discourse on sustainability reporting, offering valuable insights for policymakers, investors, and corporate leaders striving to align business success with societal impact.

Tax disclosure has long been of concern to the public. Corporations provide tax disclosure as part of their financial reporting, whether on a voluntary or mandatory basis. However, the level of tax disclosure is still problematic due to the secrecy aspect of taxation. This research was undertaken to better understand the effects of tax avoidance, good corporate governance, industry regulation, and participation in tax amnesty on corporate tax disclosure. This research used data from 422 public Indonesian companies that had published financial statements in the year 2019. The data were analysed using multiple linear regression. The results reveal a negative relationship between tax avoidance and tax disclosure, with lower tax avoidance leading to higher tax disclosure; a positive relationship between both good corporate governance and tax amnesty and tax disclosure, with better corporate governance and tax amnesty leading to higher tax disclosure; and a negative relationship between industrial regulations and tax disclosure, with increased industrial regulations leading to lower corporate tax disclosure. Overall, this research shows that tax disclosure not only reveals tax activities but also reflects the company’s views on tax compliance.

PurposeThis paper aims to examine the impact of corporate tax planning (TP) on tax disclosure (TD). Using tax expenses data set, with the detailed effective tax rate (ETR) by reconciling individual items of income and expenses.Design/methodology/approachA firm-level panel data set is used to analyse 286 non-financial listed companies on Bursa Malaysia that spans the period 2010-2012. Multivariate statistical analyses were run on the sample data. The empirical understanding of TD depends on public sources of data in the financial statement, characterized in the aggregated note of tax expenses. Fitting with Malaysian environment, the authors measured TD using modified ETR reconciling items.FindingsResults show that TP, exhibit a robust positive influence on TD. This suggests that TP is related to lower corporate TD. In addition, companies with high TP attempt to mitigate the disclosure problem by increasing various TD. The authors further find significant positive impact between each of firm size and industry dummy, on TD. This means that company-specific characteristics are significant factors affecting corporate TD.Research limitations/implicationsThis study contributes to the literature on the effect of TP on TD. It depends on both the signalling theory and the Scholes–Wolfson framework, which are the main theories concerned with TP and TD. Therefore, from a theoretical side, the authors add to the current theories by verifying that users are the party influenced whether positively or negatively, by the extent of TD or the extent of TP activities through Malaysian organizations.Practical implicationsThe evidence found in this paper has important policy and practical implications for the authorities, researchers, decision makers and company managers. The findings can provide them some relevant insights on the importance of TP actions from companies’ perspective and contribute to the discussion of who verifies and deduces from TD directed by companies.Originality/valueThis paper originality is regarded as the first attempt to examine the impact of TP on TD in a developing country such as Malaysia. Malaysian setting is an interesting one to examine because Malaysia could be similar to other countries in Southeast Asia. Results contribute significant insights to the discussion about TD regarding, which parties are responsible for the verification of TD by firms, and which parties benefit from this disclosure. Findings suggest that companies face a trade-off between tax benefits and TD when selecting the type of their TP.

PurposeThis paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive compensation are used as proxies to reflect corporate governance conduct.Design/methodology/approachThis study uses panel data set to analyse 286 non-financial listed companies on Bursa Malaysia for the years 2010-2012. Tax disclosure was gathered from the financial statements, particularly in the consolidated of tax expenses. Tax disclosure was measured using modified effective tax rate reconciling items. Multivariate statistical analyses were run on the sample data.FindingsThis study finds that managerial ownership and incentive compensation do not significantly influence tax disclosure. On the other hand, it is found that there are significant positive associations between each of firm size and industry dummy, and tax disclosure. This means that company-specific characteristics are important factors affecting corporate tax disclosure.Research limitations/implicationsThis study extends the work of previous studies by suggesting that the signalling theory and the agency theory are the main theories concerned with tax disclosure and corporate governance. The authors add an additional appreciation of the contribution of corporate governance from the interested parties’ tax disclosure evaluation in the Malaysian environment.Practical implicationsThe evidence found by this study has important policy and practical knowledge implications for the authorities, researchers, decisionmakers and firm managers. The findings provide them with some relevant insights on the importance of corporate governance practices from the companies’ perspectives and contribute to the discussion of who verifies and deduces from tax disclosure directed by companies.Originality/valueTo the best of the authors’ knowledge, this study is the first attempt to examine the influence of the corporate governance internal mechanisms on tax disclosure in a developing nation like Malaysia. Although this paper focuses on a single country, it contributes significantly to the debate about tax disclosure in relation to “comply or explain”, as suggested in the Code of Corporate Governance. This study shows that companies are trying to avoid as far as possible disclosing tax-related information.

PurposeThis paper aims to examine the differences in quality and quantity of disclosures dealing with greenhouse gas emissions among companies with a relatively large or small carbon footprint. It also considers whether disclosures are being included in the primary report to stakeholders (an integrated report) or in a secondary source (a sustainability report).Design/methodology/approachA comprehensive carbon disclosure checklist was constructed based on professional and academic literature to identify and categorise carbon disclosures. Quality is gauged according to a multi-dimensional assessment derived from prior research based on density of reporting, disclosure attributes, management orientation, integration of information, ease of analysis, reporting on strategy, use of independent assurance and repetition. A content analysis is used to gauge the quantity and quality of carbon disclosures of 50 companies listed on the Johannesburg Stock Exchange. Differences in the quantity and quality scores of high- and low-carbon companies are tested using a Mann–Whitney U test.FindingsCarbon disclosures are used as part of a legitimacy management exercise. This involves not just the use of additional environmental disclosure to placate stakeholders as environmental impact grows. The quality of reporting and location of disclosures are, perhaps, more important for understanding how companies are responding to stakeholder expectations for reporting on carbon emissions and climate change.Practical implicationsDespite mounting scientific evidence on the risks posed by climate changes, companies remain reluctant to commit to high-quality reporting on specific steps being taken to reduce carbon emissions. Even when disclosures are being targeted at key stakeholders, the possibility of impression management remains. It may, therefore, be necessary to have carbon reporting regulated and independently assured. More guidance on how companies should be managing and reporting on carbon emissions and climate change may also be required.Social implicationsDespite mounting scientific evidence on the risks posed by climate changes, companies remain reluctant to commit to high-quality reporting on specific steps being taken to reduce carbon emissions. Even when disclosures are being targeted at key stakeholders, the possibility of impression management remains. It may, therefore, be necessary to have carbon reporting regulated and independently assured. More guidance on how companies should be managing and reporting on carbon emissions and climate change may also be required.Originality/valueThe study merges the traditional approach of focusing on the quantity of disclosures to illustrate the application of legitimacy theory in a sustainability/integrated reporting setting with less-seldom-studied quality and location of reporting. This result provides a more nuanced perspective of how carbon disclosures are being used to manage stakeholders’ reporting expectations.

PurposeThis paper aims to examine whether tax disclosure in Global Reporting Initiative (GRI)-based sustainability reporting mitigates aggressive tax avoidance.Design/methodology/approachThis study uses a multiple regression method for 714 nonspecially taxed firms listed on the Indonesia Stock Exchange in 2014–2018.FindingsThe findings demonstrate that disclosing tax payments in GRI-based sustainability reports reduces aggressive tax avoidance. Additional analysis indicates that the number of GRI-based sustainability reports positively affects aggressive tax avoidance. However, disclosing tax payments in multiple GRI-based sustainability reports negatively affects aggressive tax avoidance.Originality/valueRecent prior studies demonstrate that aggressive tax avoidance does not indicate an organizational culture that devalues corporate social responsibility. This paper argues that firms cannot find the link between tax and corporate social responsibility when tax payments are not incorporated in sustainability reports. GRI considers tax a sustainability issue and seeks to institutionalize this concept by recommending that firms disclose taxes in their sustainability reports. This research analyses whether disclosing taxes in GRI-based sustainability reports may serve as a form of soft law by convincing firms that tax is a sustainability issue, thereby reducing their tax avoidance. This topic has received little attention in previous research.

This study provides a comprehensive, integrated theory for explaining social responsibility disclosures. The relevant theory applied is Ullmann's (1985) three dimensional model of social responsibility disclosure. The research question asked is: Can Ullmann's stakeholder theory be operationalized to help explain the quantity and quality of environmental disclosures in annual reports in a voluntary reporting setting? Quantity is measured by the number of sentences devoted to environmental issues reported in the annual report while quality of disclosures is measured by a index scored by users of financial statements with financial reporting qualifications. Both quantity of disclosure and quality of disclosure are highly correlated. The sample consists of 102 of the largest companies listed on the Australian Stock Exchange. Ordinary least squares regression is used to determine if variables selected to measure stakeholder power, strategic posture and economic performance are significant in explaining the quantity and quality of environment disclosures in annuals reports. The stakeholder power dimension of Ullmann's framework measured by shareholder, regulator and lobby groups is significant in explaining environmental disclosures. The strategic posture dimension of Ullmann's model measured by content of the mission statement and existence or otherwise of environmental or social responsibility committees also find strong statistically significant support in the results. The third dimension of economic performance is not supported by the results. Consistent with prior studies, size is found to be a significant predictor of disclosure practices.

This study aims to develop a comprehensive tax disclosure framework to support fiscal sustainability in Indonesia, by referring to the GRI 207 standard and domestic tax regulations. A qualitative-phenomenological approach was adopted in this study through literature reviews and in-depth interviews with key stakeholders, including tax regulators, sustainability experts, academics, consultants, and corporate taxpayers. Thematic analysis is applied to formulate tax disclosure indicators. The findings reveal that all identified elements and indicators are valid for constructing the tax disclosure framework. This study provides significant and original insights by developing a Tax Disclosure Index design for the Indonesian context while remaining aligned with international standards. The academic implication is to enrich the existing literature on tax disclosure frameworks. For public policy regulators, the development of a contextualized and standardized Tax Disclosure Index provides an evaluative instrument that can be utilized by tax and financial authorities in formulating more comprehensive tax transparency policies. The research findings encourage companies to proactively integrate tax aspects into their fiscal sustainability strategies and ESG (Environmental, Social, Governance) reporting. Furthermore, this study provides valuable insights for other countries that have not yet implemented tax disclosure regulations within similar contexts.

Using data from 32 countries, we identify the determinants of assurance provider type (accounting firm versus non‐accounting firm) and examine whether assurance provider type is associated with sustainability reporting quality. We measure sustainability reporting quality via changes in metrics made to sustainability reports from the prior year and restatements to correct errors in previously issued sustainability reports. We find that accounting firm assurers are positively associated with changes in metrics and restatements of prior period errors. We also examine the association between assurance and the application level of Global Reporting Initiative (GRI) guidelines used to prepare the sustainability report. Both accounting and non‐accounting firm providers are associated with higher GRI application levels and increases in GRI application level. Together, these results suggest that non‐accounting firms focus more on the quantity of disclosures, while accounting firms emphasise both the quality and quantity of disclosures in sustainability reports in accordance with the GRI Reporting Framework. Among accounting firm providers, we find little difference in sustainability reporting quality between accounting firm assurers that do versus do not audit the financial statements. The results of this study provide important insights for practitioners and standard‐setters as to the value of sustainability assurance and the relative benefits of engaging accounting versus non‐accounting assurance providers.

This study aims to determine the effect of Executive Compensation and Corporate Social Responsibility Disclosure on Tax Disclosure with Tax Aggressiveness as a mediation variable on LQ-45 companies listed on the Indonesia Stock Exchange during 2016-2019. Sample was selected using purposive sampling method and the valid data was 31 companies. Data processing techniques using multiple regression analysis what helped by SPSS program (Statistical Product and Service Solution) for Windows released 23 and SmartPLS version 3.3.2. The results of this study indicate that executive compensation has a negative and significant influence on tax disclosure while corporate social responsibility disclosure has not influence on tax disclosure, tax aggresiveness has not influence on tax disclosure, executive compensation has not influence on tax disclosure through tax aggresiveness and corporate social responsibility disclosure has not influence on tax disclosure through tax aggressiveness.

Sustainability reporting has become increasingly crucial for businesses worldwide, communicating environmental, social, and governance (ESG) performance to stakeholders. Despite the growing importance of sustainability reporting, there remains a gap in understanding how financial indicators influence the disclosure process, particularly in Vietnamese enterprises. This paper aims to address this gap by investigating the influence of financial indicators on the sustainability reporting practices of Vietnamese companies. Employing a mixed-methods approach, combining a quantitative analysis of financial data with a qualitative assessment of sustainability reports, the research seeks to uncover the nuanced relationship between financial performance metrics and the quality and extent of sustainability disclosures. The research was conducted to identify, evaluate, and measure financial factors affecting the quality of companies’ sustainability reports in Vietnam. The research is based on scoring the sustainable development reports of the top 100 listed joint stock companies on the HOSE—Ho Chi Minh City Stock Exchange. Based on the research model of Dissanayake, in the case of Vietnam, we build a scoring model for the sustainable development report based on GRI standards and add additional criteria appropriate to the situation of each listed company on the Vietnam stock exchange. Based on the research overview, our team tested hypotheses related to the short-term current ratio, total asset turnover ratio (AT), return on equity ratio (ROE), and debt-to-equity ratio (DE). The empirical results show that the AT and ROE significantly positively affect the sustainability reports; the DE hurts the sustainability reports. The findings are expected to provide valuable insights into the factors shaping sustainability reporting practices in Vietnam and contribute to the existing literature on corporate disclosure and sustainability.

Enron-type corporate financial accounting scandals in the beginning of the millennium have given rise to a renewed interest in corporate tax disclosure. Anecdotal evidence suggesting a connection between corporate fraud and aggressive tax planning has motivated academics and policymakers to reconsider tax disclosure as a way to monitor corporate governance and limit tax avoidance. This article offers a different perspective on tax disclosure, tying it to the broader question of how policymakers should monitor the political impact of corporate business activities. The article claims that policymakers should view corporations’ tax planning strategies as part of a broader corporate political impact on social issues. This impact results from the genuine difficulty of bifurcating corporate business decisions from their political ones. This difficulty is a result of many judgment calls required in such decisions, which relate to individuals’ moral and political preferences. Tax planning is one of these mixed business-political decisions, and the article advances the notion that policymakers should analyze tax planning not only as a law enforcement issue, but also through corporate governance lenses. To establish this inquiry, the article explains why the investor-shareholder relationship gives rise to political agency problems, which neither traditional nor critical corporate law literatures recognize. It then demonstrates how the costs associated with this type of agency relationship could be reduced via disclosure of information about the impact of corporate activities on issues of political concern. The article uses insights from financial markets theory to explain how disclosure of non-financial information would help to better align corporate actions with the political preferences of shareholders, despite shareholder rational passivity and apathy. It is then illustrated, through the Apple case, how policymakers can use the theoretical conclusions reached through this analysis to formulate a real world policy proposal with respect to corporation tax planning. Through its use of a wide range of interdisciplinary resources, this article aims to reformulate the multi-layered inquiry over the benefits and costs associated with corporate tax disclosure.

The emerging of sustainability reports reflects the company's efforts in implementing greater transparency. A sustainability report reviews the company’s performances in three parameters: economic, environmental, and social, in which stakeholder engagement is one of the most important elements. However, stakeholder-engagement practices are considered still far from expectation. Information disclosed by a company is not enough to meet the information needed by the public. This study aims to determine the level of quality of stakeholder engagement disclosures in sustainability reports. The quality of disclosure was reviewed by four aspects: ‘Report Content’, ‘Stakeholder Representation’, ‘Stakeholder Engagement’, and ‘Channel and Methods of Stakeholder Engagement’. The content analysis was applied to evaluate the quality of these disclosures and to determine the class ranks of low, moderate, high, and very high. Samples were obtained from 28 sustainability reports which had been consistently published by 7 companies in Indonesia during the period of 2008-2011. The results show that the level of quality of stakeholder engagement disclosures in Indonesian sustainability reports is generally considered moderate. The ‘Employee’ seems to be the major stakeholder which was disclosed widely and it has a relatively strong power to influence a company’s decision.

Phd Thesis: International Perspective: The Impact of Corporate Social Responsibility Reports on Analysts' Coverage and Forecast Properties: Evidence from Ft Global 500

Advances in digital technology that penetrase so quickly create serious changes in various fields including the economy. Sustainability report disclosure is one of the crucial issues that is interesting and always hotly discussed by economic actors in the 5.0 era, including sharia economic actors. This research is important because the accuracy of the sustainability report disclosure is not only a form of compliance with sharia values but also as a trend of needs for stakeholders, and becomes an added value for companies including Bank Syariah Indonesia (BSI) in order to reach wider stakeholders and investors. Increasing the accuracy of the quality and quantity of the sustainability report disclosure can be a solution for BSI in developing its Islamic finance industry. As for the research objectives; First, knowing the effect of the accuracy of the quality and quantity of the sustainability report disclosure on financial performance; Second, knowing the impact of the quality and quantity of the sustainability report disclosure on investor interest in investing. This research is a type of field research with a mix method. The sample was determined through purposive sampling and obtained as many as 34 respondents. The research data used are primary data and secondary data, while the data collection method is done through questionnaires, interviews and documentation. The analysis technique was carried out by using multiple linear regression, t test, F test, and R-Square test. The results of the study show that the accuracy of the quality and quantity of the sustainability report’s disclosure, either partially or simultaneously, has a positive and significant effect on investment interest, as evidenced by the probability statistics obtained, namely 0.000 < 0.05. Both variables have an effect of 94,3% on interest in investing. From the results of the study, it is also known that the variable quality of sustainability report disclosure is the dominant variable that influences the level of investor interest in investing with the value obtained reaching 1.254085 on investors in the Valu Capital stock community in Banda Aceh.