The dual role of audit committees: Mitigating tax aggressiveness and enhancing corporate sustainability

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Abstract

This study examines the unique role of audit committees as moderators of the relationship between tax aggressiveness and corporate sustainability, an aspect that remains underexplored in prior literature. A quantitative analysis was conducted on firms listed on the Indonesia Stock Exchange (IDX) during the 2017–2022 period. The findings show that tax aggressiveness negatively affects corporate sustainability. This result is consistent with stakeholder theory and previous studies emphasizing that aggressive tax practices can undermine legitimacy and stakeholder relationships. However, the main contribution of this study lies in the evidence that audit committees are not only able to mitigate but even reverse the negative effect of tax aggressiveness into a positive one. This finding supports agency theory by reaffirming the monitoring role of audit committees in ensuring that tax strategies remain aligned with good governance and social responsibility (Hsu et al., 2018; Velte, 2023). Practically, the results emphasize the importance of strengthening audit committee capacity and independence to safeguard sustainability, while also providing regulators with a basis for tightening qualification requirements. Limitations relate to the sample coverage and the measurement of tax aggressiveness, suggesting that future studies should develop more context-specific indicators tailored to emerging markets such as Indonesia.

Keywords: Tax Aggressiveness, Corporate Sustainability, Audit Committee, Corporate Governance

Authors’ individual contribution: Conceptualization — N.H.P. and S.M.; Methodology — N.H.P. and S.M.; Software — N.H.P.; Validation — N.H.P. and S.M.; Formal Analysis — N.H.P. and S.M.; Investigation — N.H.P.; Resources — N.H.P. and S.M.; Data Curation — N.H.P. and S.M.; Writing — Original Draft — N.H.P.; Writing — Review & Editing — N.H.P. and S.M.; Visualization — N.H.P.; Supervision — S.M.; Project Administration — N.H.P. and S.M.; Funding Acquisition — N.H.P. and S.M.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G34, H26, Q56

Received: 13.06.2025
Revised: 17.08.2025; 29.12.2025
Accepted: 05.01.2026
Published online: 06.01.2026

How to cite this paper: Primasari, N. H., & Mutmainah, S. (2026). The dual role of audit committees: Mitigating tax aggressiveness and enhancing corporate sustainability. Corporate Governance and Sustainability Review, 10(1), 52–61. https://doi.org/10.22495/cgsrv10i1p5