Environmental performance and corporate tax avoidance: Greenwashing policy or eco-responsibility? The moderating role of ownership structure

Abstract

This study examines the impact of environmental performance on tax avoidance separately and then moderated by institutional and family ownership. Based on a sample of 222 French firms from 2009 to 2021, the results show that environmental performance is positively associated with tax avoidance. Moreover, the study reveals that this relationship is significantly moderated by institutional and family ownership. Specifically, institutional investors and family shareholders separately amplify the positive impact of environmental performance on tax avoidance. The research also presents further evidence indicating that all three dimensions of environmental performance—resource consumption, emissions, and eco-innovation—are positively linked to tax avoidance. Notably, this effect becomes prominent post the Paris Agreement. Even when accounting for the impact of major financial crises such as the Great Financial Crisis and the COVID-19 pandemic, the findings remain consistent. These results maintain their robustness when alternative measures of tax avoidance are considered. Overall, this study provides valuable insights with implications for regulators, authorities, and investors.