ESG Disclosure and Corporate Tax Avoidance: The Moderating Effects of State Ownership and Financial Constraints-Evidence from Vietnamese Non-Financial Firms

This study investigates the impact of ESG performance on the tax avoidance behavior of 118 non-financial listed firms in Vietnam from 2020 to 2024. Employing a Random Effects Model (REM), empirical results reveal that sustainability reporting quality-measured by individual E, S, and G pillars and a composite ESG index-is negatively associated with corporate tax avoidance, proxied by the Effective Tax Rate (ETR). Among these, the social (S) pillar exerts the most pronounced effect; however, individual component impacts remain less substantial than the comprehensive ESG index. Furthermore, findings indicate that the mitigating effect of ESG on tax avoidance significantly weakens when firms face financial constraints or operate under state ownership. Notably, applying machine learning techniques demonstrates that a CatBoost algorithm integrating the ESG variable achieves 52.92% predictive accuracy for tax avoidance, outperforming an XGBoost model lacking ESG inclusion (38.14%). Additionally, feature importance analysis of financial and non-financial variables highlights ROA as the dominant financial predictor (35.5%), while ESG contributes a notable 10.35% to the model's explanatory power. Ultimately, these findings provide vital insights for policymakers and investors regarding the interplay between sustainability commitments, ownership structures, and corporate tax strategies.