Surviving Strategy: The Tax Avoidance–Greenwashing Nexus and the Moderating Role of Business Strategy

ABSTRACT

This study examines the relationship between tax avoidance (CTA) and greenwashing, and how business strategy types (i.e., defender, analyzer, and prospector) influence this relationship during periods of economic uncertainty. Using a battery of estimating models and focusing on firms on the Australian Stock Exchange (ASX) between 2019 and 2022, the study found a positive association between CTA and greenwashing, suggesting that CTA firms are more inclined to engage in symbolic corporate social responsibility (CSR) strategies (i.e., Greenwashing) during economic crises. The CTA‐greenwashing association is more pronounced among Defender‐type firms than among Prospector‐ and Analyzer‐type firms. Furthermore, we found that non‐environmentally sensitive firms and firms heavily impacted by the COVID‐19 pandemic are more susceptible to the CTA‐greenwashing nexus. These findings call for a more context‐sensitive policy to encourage genuine CSR practices and transparency, with consideration of the roles of economic crises and business strategy types in influencing firms' engagement in opportunistic behaviors.