Utilizing ESG Disclosure and Digital Transformation to Mitigate Tax Avoidance: The Role of Firm Size as a Moderator in Indonesian

Abstract

Tax avoidance remains a critical challenge for Indonesian firms, eroding public revenues and market fairness. This study examines the effect of ESG disclosure and digital transformation on mitigating corporate tax avoidance, with firm size as a moderator. Panel data from 250 listed Indonesian companies over 2018–2024 were analyzed using panel data regression with fixed effects. Moderation analysis was conducted by including interaction terms between firm size, ESG disclosure, and digital transformation. Results show that both ESG disclosure and digital transformation significantly reduce tax avoidance, and this mitigating effect is stronger in larger firms, while smaller firms exhibit a weaker relationship. These findings extend agency theory by framing ESG and digital initiatives as governance mechanisms against aggressive tax practices. Practically, firms should tailor ESG and digital strategies to their scale to bolster tax compliance.