P134 The Effect of Corporate Governance Mechanisms on Tax Avoidance with Environmental, Social, and Governance (ESG) as a Mediating Variable

(A Study of LQ45 Companies Listed on the Indonesia Stock Exchange for the 2020–2024 Period)

Abstract

This study aims to examine the effect of corporate governance mechanisms on tax avoidance with Environmental, Social, and Governance (ESG) as a mediating variable. The corporate governance mechanisms are proxied by board size, board independence, and board gender diversity. Tax avoidance is measured using the Effective Tax Rate (ETR), while ESG is measured using ESG scores obtained from the Refinitiv database. The population consists of companies included in the LQ45 Index and listed on the Indonesia Stock Exchange during the 2020–2024 period. The sample was selected using purposive sampling, resulting in 24 companies with 120 observations. Data were analyzed using panel data regression with EViews 13, followed by mediation effect analysis and the Sobel test to examine the mediating role of ESG. The results indicate that board independence has a significant effect on ESG, whereas board size and board gender diversity have no significant effect on ESG. Simultaneously, board size, board independence, and board gender diversity significantly affect ESG. However, board size, board independence, board gender diversity, and ESG have no significant effect on tax avoidance, either individually or simultaneously. Furthermore, ESG does not mediate the effects of board size, board independence, or board gender diversity on tax avoidance. These findings indicate that corporate governance mechanisms and ESG have not become significant determinants of tax avoidance, either directly or indirectly, among LQ45 companies during the research period.